Mortgage Market Update for the week of May 12, 2008

Here is the Mortgage Market Update for the week of May 12, 2008 brought to you by Larry Iest of Hemet Mortgage.

LAST WEEK

After a volatile week of bond prices moving every which way mortgage backed securities ended the week about where they began. Action does remain volatile but the current bond pricing is above dual layers of support, the 50 and 100 day moving average. If these support levels can hold through this weeks news that would be great for rates and show how powerful these layers of support really are. Remember mortgage rates and mortgage backed securities (bonds) have an inverse relationship. Meaning if bonds increase for the week mortgage rates will improve.

THIS WEEK

This week is filled with high impact reports and in addition several key Federal Reserve members will be giving speeches. Federal Reserve Chairman Ben Bernanke will be among the Fed Speakers giving speeches Tuesday and Thursday. Given the volatility in the markets and the uncertainty his speeches regarding stabilizing the credit markets could be market movers. In addition to the speeches we have high impact market reports. Retail sales will be released on Tuesday followed by Wednesday's release of Consumer Price Index (CPI). CPI is critical because it attempts to measure inflation at the consumer level of the economy. Since inflation erodes away the income from bonds, this is a closely watched report and if it comes in very differently from the estimates can cause quick shifts in the markets. Thursday we will get a read on the beaten down housng market with a look at housing stated and building permits. Lately the housing starts numbers have been way down, which is a big help in trying to shrink the ever increase housing inventory. On Friday consumer sediment for May will be released. It will be interesting to see how the consumer is holding up in the face of rising food costs and $125 per barrel oil.