Thursday, March 18 - Let the Madness Begin!!

Before I get into the daily Market - Just an FYI - I am picking West Virginia to beat Kansas in the Championship Game of the NCAA Hoop Tourney - good luck with your brackets!!


Trading activity in the mortgage market is thin and sporadic in today's early going.


The Labor Department reported this morning that the number of workers filing first-time claims for unemployment benefits fell by 5,000 to 457,000 during the week ended March 13th. The number of workers collecting extended jobless benefits fell by a little more than 7,300. The story here is that the labor market is moving very slowly in the right direction -- but until the number of workers filing first-time jobless benefit claims below 400,000 on a week-over-week basis -- the Fed is unlikely to get serious about pushing their benchmark short-term interest rates higher. If the Fed is not poised to push short-term interest rates higher - mortgage interest rates are unlikely to make a sustained move to notably higher levels either. Don't misunderstand -- I am not saying rates will continue to fall - I am saying the pace of increase as it develops will likely be mild rather than a dramatic "sling-shot" move higher.



In a separate report, the Labor Department said its Consumer Price Index was unchanged in February from January, while the more important core rate (a measure that excludes the volatile food and energy components) inched up 0.1% after falling 0.1% in January. The majority of mortgage investors showed as much interest in this report as most college freshman show in a late afternoon world history class. The general assumption among market participants is that core inflation will remain comfortably low through the end of this year thanks to the lingering effects of the recession. If that assumption proves accurate - the upward pressure on mortgage interest rates that tends to come from rising inflation concerns will almost certainly remain muted - and that is a positive for the prospects for very modest mortgage interest rates through at least the end of 2010 (in my judgment we are talking 6.0% or less for a 30-year mortgage).