Mortgage Rates--



A quiet start in the bond market this morning but helped a little with stock indexes looking weaker into the open at 9:30. Yesterday treasuries and mortgage prices improved even with the stock market improving. Europe’s stock markets were lower after a couple of good days. Today’s only data, Feb factory orders, out at 10:00 were expected to jump after declining in Jan. At 9:00 this morning the 10 yr note unchanged while mortgage prices on 30 yr fixed loans up .03 bp.

March auto sales are expected to have increased as consumers were driven by high gasoline prices. Chrysler sales already out were up 35% in March on sales of small Fiat models; sales last month climbed to 163,381 cars and light trucks from 121,730 a year earlier. Sales of the Fiat 500 led Chrysler but other models also saw stronger sales. Later today the rest of the manufacturers will report; GM sales are expected to be boosted by the Chevrolet Sonic subcompact that gets 33 miles (53 kilometers) per gallon in combined city and highway driving, may report a 19% increase in March sales. A Ford executive told CNBC this morning its sales were up 5.0%. Toyota probably increased total sales by 15%, Honda sales may have increased 5.3%. A 14.5 million sales rate for March would exceed the 13.1 million pace from a year earlier and set an average rate of 14.6 million for the first quarter, ahead of analysts’ estimates for full-year deliveries. Total light-vehicle sales may rise to 1.42 million, the average of eight analysts’ estimates. That would be the highest monthly total since August 2007, according to researcher Autodata Corp.

At 9:30 the DJIA opened -16, 10 yr note +2/32 at 2.17% and MBS prices +3/32 (.09 bp).

At 10:00 Feb factory orders expected to be up 1.4% were reported +1.3%; no reaction to the report as it was in line with forecasts. Jan orders were revised from -1.0% to -1.1%.

This afternoon the minutes from the 3/13/FOMC meeting will be released; traders and investors keen to get a look at the discussions about the economic outlook and comments concerning another QE move. Bernanke has been manipulating markets recently, using his speeches to talk rates down while at the same time trying to talk the economy up a little. Never had a Fed chief doing as much manipulation to keep long term rates from increasing. Not too sure if that is good or bad; nevertheless that is what he has been doing for the past couple of months. On one hand keeping short rates lower, on the other continuing to discount any inflationary expectations. Bernanke clearly realizes he is the Lone Ranger out there trying to keep the economy moving forward with very low interest rates while Congress is completely impotent and can’t find any common ground to add fiscal incentives. As long as Bernanke holds out the carrot of another easing if the economy were to reverse course he can keep longer dated treasuries and mortgage rates low; he is saying the economy is recovering with soft spots still there, however he insists if necessary he will ease further. The real question is; can he keep mortgage rates under 4.00%?

Technically, the 10 yr yield is trading below its 20 day average for the first time since early March. 30 yr MBS is trading above its 20 day average and working on its 40 day average. The 10 yr still is having a problem getting below 2.15%. With March employment data on Friday we are not expecting much major change in the bond and mortgage markets until the data hits. Tomorrow ADP will come with its private job estimate; recently the ADSP data has been close to what the BLS reports.