"Mortgage Bonds improved and Stocks lost more ground today on the awful Retail Sales news. Sales plunged by 2.7%, far worse than expected. Even worse, when you strip out autos, the number declined 3.1% versus expectations of a 1.4% decline. Retail sales have now fallen for six months in a row.

In the banking sector, Deutsche Bank, which is Germany's largest bank, warned of a fourth-quarter loss of $6.3 Billion, and Chase announced they are pulling out of their broker wholesale lending. This has added to the selling pressure on Stocks.

The Fed's Beige Book will be released this afternoon at 2 pm and could influence the markets, so stay tuned. For right now, I recommend floating to see if prices can revisit resistance at the all-time price highs, about 40 basis points above present levels."



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"Stocks are trading near unchanged levels after being under selling pressure yesterday due to Alcoa's 4th quarter loss of $1 Billion and rumors that Citigroup has more credit losses mounting.

In other news, Federal Reserve Chairman Ben Bernanke discussed the financial crisis this morning, saying that the highest priority is to promote global financial stability. On a positive note, he said that the US Federal Reserve still has enough policy tools to combat the current recession.

For now, I recommend floating. But I will be watching carefully to see if Stocks rebound after losing 500 points in the last 5 days. If that happens, Bonds could drift a bit lower and a change of course may be needed. I will keep you posted."



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"Today kicks off the 4th quarter earnings season for the Stock market. No one expects any stellar reports to be in store, but many eyes and ears will be on what these companies say regarding future earnings.

In other news, Oil prices are tumbling this morning to near $38 a barrel on concerns that slumping demand will outweigh output cuts by OPEC. Due to the present economic slowdown, Oil consumption is expected to fall by 1 million barrels a day this year in the US alone.

Currently, Bond prices are down, but may rebound a bit later if the Fed steps in with some buying. Therefore, I recommend floating for now.


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"The Labor Department reported this morning that there were 524,000 jobs lost during the month of December, this was worse than expectations of 500,000. All told, there were 2,600,000 jobs lost in 2008 and was the biggest job loss in any calendar year since 1945, when 2,750,000 jobs were lost as the wartime economy was demobilized.

Adding further sting to the report was the Unemployment Rate, which shot up higher than expectations to 7.2%, the highest reading in 16 years.

I will continue to recommend Floating for now, but be mindful that Mortgage Bonds are trading at all-time historic highs - so a pullback lower would not be a surprise."


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"Mortgage Bonds are trading higher and at historic levels as the Fed was likely active in the markets continuing their purchase program this morning.

Meanwhile, Stocks are under selling pressure thanks to a rash of earnings warnings from the nation's retailers. Wal-Mart said today that 4th quarter profits will miss expectations after one of the worst holiday shopping seasons on record, while Macy's and Limited Brands cut their earnings forecast after the weak December sales readings. Macy's also said they are closing 11 stores.

In other news, the markets are bracing for a bad Jobs Report tomorrow and if the number is indeed bad, Mortgage Bonds could improve further as Stocks will likely come under selling pressure. Therefore, I recommend floating into tomorrow's report, but I will let you know if the news of the day requires a change of course."

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"The Fed was back in the markets this morning aggressively buying Mortgage Backed Securities pushing prices higher as it tries to lower home loan rates. The Fed will be buying $500B of Mortgage Bonds - that equals approximately $4B in buying power each trading day...that is pretty good buying support, which could help mortgage rates move steadily sideways to lower over the first two quarters of 2009.

At 2pm ET the Fed will release the Minutes from the December 16 Meeting which may shed some light on the Fed's view of the economy and the reasoning behind the aggressive cut. The Fed lowered the Fed Funds Rate by .75% to a range of 0 to .25% at that meeting.

With the Fed providing underlying buying support to Mortgage Bonds, I am recommending to float longer-term, but on short-term transactions we should be ready to lock at a moment's notice to protect pricing. We will likely see the lowest rates in our lifetime during the first two quarters of 2009, so get this message to everyone who can benefit and have them lock in during this once in a lifetime opportunity."

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"Happy New Year! Mortgage Bonds are off to a great start in 2009, as the Fed begins its planned purchase of Mortgage Backed Securities. This process will continue gradually through June and should help buoy Mortgage Bond prices. For today, there are no economic reports due out, so Mortgage Bonds will likely respond to today's Fed announcement.

In other news, President-Elect Obama's new stimulus package will reportedly be worth $775 Billion and will include hundreds of Billions of dollars worth of tax breaks and credits for individuals and businesses. This is good news for the economy and should help with consumer confidence over time
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