Update #3/ week of July 27, 2009/ Rates Improve

Good Morning Everyone …and welcome to the UPDATE!

China’s stock market dropped significantly last night as well as Hong Kong’s Hang Seng. This could further set the stage for a correction in our markets, which is slowly happening this week. Our stock market is very choppy today with earnings reports pouring in by the hundreds this week. Oil supplies are surprisingly up for the week as reported this morning and it’s causing oil prices to plunge – down almost $4 a barrel as of this writing.

Durable good orders reported this morning a drop of 2.6%, far worse than analysts expectations. But, investors are shrugging off the report since most of the drop is in defense and aircraft. Exclude these two items and the report is more within the anticipated numbers. There is another auction today of $39 billion worth of 5 year Treasuries, demand is solid and this is having a positive effect on MBS’s. The delivery rate on the MBS’s is down 6 bps from yesterday’s close and we can see the difference in pricing. Our 30 year conforming is another .125 to .25 better in rebate this morning . . . so we’re slowing making headway.

I’ll be in the office the rest of the day. Call me here if I can help you, and have a terrific Humpday!