Greek Bailout Boosts Market and Rates Jump FRIDAY IS KEY FOR RATES & STOCKS

Greek Bailout Boosts Market and Rates Jump FRIDAY IS KEY FOR RATES & STOCKS

I started this week with my usual Monday post about where I anticipated mortgage rates to be moving this week. I anticipated a flat to lower trend for rates and so far I have been wrong. I hate to be wrong but I'm glad when it's on the heels of stronger than expected economic data.

There have been a slew of positive reports this week that have surprised to the upside. Pending Home Sales where better than expected and the Case/Schiller Home Price Index showed an increase in the home prices overall. The question is, are we forming a bottom in the housing markets with these reports or is it just a good month. A couple of consecutive reports would make me feel better about that assessment but as for now it looks a lot better than just a couple of weeks ago. These positive reports have led investors to take some money out of the bond market and into the equity market which has pushed up rates a bit.

Case/Schiller Report:

Pending Home Sales Index:

The other market moving event came out today was the vote by the Greek government to pass their austerity program. This will hopefully save their government money, but was really done so they can get a bailout from the EU primarily Germany and France.

There is still some important data this week that can really move rates either way.

Tomorrow at 830AM- Week jobless claims

Finally in my eyes the most important report of the week is Friday's ISM Manufacturing index. By definition, the Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. A composite diffusion index of national manufacturing conditions is constructed, where readings above (below) 50 percent indicate an expanding (contracting) factory sector.

Notice the big drop off last month. If we have another big drop the markets will have a sharp pull back and rates will move along with that. If we show growth the market and rates will be heading north. Pay very close attention to this report on Friday.