Mortgage bond prices finished the week near unchanged which kept rates in check. The data was mixed which did little to ease economic uncertainties. Personal income rose 0.3% versus the expected 0.2% increase which was not good for lower rates. However, spending was unchanged versus the expected 0.2% increase. This pattern continued as the ADP employment report showed strength and the weekly jobless claims data showed signs of labor market weakness. We finished in the same manner with the employment report Friday. Unemployment was 4.9% versus the expected 5% reading which was bad for rates. The payrolls component rose 151K versus the expected 190K increase which was good for rates. Mortgage interest rates finished the week near unchanged despite the up and down trading. Auctions US Treasury bonds do not directly dictate fixed mortgage interest rate pricing however they do have an indirect impact. Both Treasuries and mortgage bonds often track in the same direction but this is not always the case. There are many times that Treasuries and mortgage bonds move inversely. Despite the overwhelming size of the US economy, foreign investors can still have an effect on moving the financial markets. When foreign economies struggle foreign investors often purchase US based investments including mortgage bonds. This demand usually causes mortgage bond prices to rise and interest rates to fall. This flight to quality buying is a factor that helps mortgage interest rates remain historically low. There is a real threat that continued global economic turmoil might keep foreign investors from purchasing mortgage bonds in the future. The Treasury auctions this week will be important in determining the current appetite of foreign investors for dollar denominated securities. Demand has been generally good as of late but auctions of different durations often vary in their results. If this week's auctions are poorly bid mortgage bond prices could fall pressuring mortgage interest rates higher. The inverse is also true. Be cautious heading into the auctions.