The big news of the day (so far) is that the Fed actually made their first purchase of mortgage-backed securities this morning.  The total amount of the purchase will not be known until it is announced on Thursday, January 8^th.  The Fed intends to keep a running tally of its aggregate purchases and will update its figure every Thursday until they've spent the allotted $500 billion.  It is worth noting that the money the Fed will spend to support the mortgage and housing market is not attached to any debt - the Fed just printed it up.   While this capital solves the near-term problem of providing attractive financing to stimulate home buying - it comes with a price that will be paid later - in the form of higher inflation levels.  Ah, but that is a concern for a different day.

The Fed's mortgage-backed securities purchases could not have come at a better time. 

Treasury prices have "taken-it-on-the-chin" since Friday as a growing number of investors are pacing the floor and wringing their hands over the massive $1.5 to $2.0 trillion worth of debt Uncle Sam plans to issue to support the financial markets and the economy in general this year.  As I think about it there is really no need to worry about something that is going to happen.   Fed policymakers and the incoming Obama administration have made it abundantly clear that the risk of doing too little to re-fire the country's economic engines poses a greater risk to our collective financial well being than the risk associated with doing too much.  

The central feature on this week's economic calendar will be Friday's December nonfarm payroll report.  The market has already priced in the expected loss of 485,000 jobs together with the likelihood the national jobless rate ratcheted up to 6.9% from last month's 6.7% level.  Chances are the actual numbers will match or fall within shouting distance of the consensus estimate values.  If so, the report's impact on the trend trajectory of mortgage interest rates will not be large, if it registers at all.  In the off-chance the headline December payroll shows a job loss of 470,000 or less and/or the national jobless rates posts a reading of 6.7% or less look for mortgage interest rates to edge fractionally higher.        

Today's conforming 30 year fixed is at 5.125%.