Rate Update May 21, 2008

There is no new economic data scheduled for release today. At 2PM EST the Fed will release the minutes from their April 30th meeting. Sometimes this event can draw some reaction in the financial markets.

In the absence of any significant financial news we will be watching the stock market and technical trading patterns for clues as to the direction of mortgage rates. From a technical perspective mortgage-backed bonds are trading just above multiple layers of support (shown circled on the right side of the graph below). Should bonds bounce higher of these levels rates would surely improve. However, we remain concerned that continued inflation concerns will drag bond prices below these levels pushing rates higher.

Current Outlook: locking bias.