If your loan is already locked, I would be very thankful!  We've had a very bad tumble in the past two days. 

As we've discussed previously, the week has been pretty light in terms of scheduled released economic reports.  Instead, the market is getting much more stimulus from news, announcements, and most importantly today, Bernanke's testimony in front of congress that is currently still in process.

Jobless claims came in today almost exactly as expected.  The trade deficit shrunk somewhat, but traders don't really care this morning.  The newsworthy item is Bernanke's testimony.  I don't feel that anything surprising has been said, but nonetheless, traders draw their own conclusions.  

With inflation concerns looming combined with another extremely poor showing during bond auctions yesterday, Bernanke's assertion that he is ready to cut rates again is not helping the bond market.  In fact, when the testimony began, it completely destroyed mortgage pricing, taking mortgage back securities on roughly a 1% discount point ride for the worse.  So any given interest rate today would cost you another 1%.

 The good news is we've rebounded a little since then as the stock market has failed to indicate any excitement about this willingness to lower rates.  As the stock market has stayed at about 100 points down, the mortgage bonds have improved by about half a point.  So if this stabilizes, we may only lose one leg today instead of both of them!

Again, I'll say we are overrun by lemmings!  Everyone seems to be waiting for someone else to tell them what to think.  The testimony began and the lemmings ran off the mortgage bond cliff.  Then the lemmings saw that that stocks weren't rising and were in fact dropping, so they changes their direction and are coming back again.  Expect more of this in the hours, days, and weeks to follow.  We're dealing with too much emotion in this market, and not enough cold logic.  As such, it's hard to comment on an immediate market direction.

As far as today, many lenders released pricing BEFORE the bond rebound, so definitely float unless you see a big stock market rally.  And I would float into tomorrow and boldly stand toe to toe with consumer sentiment, assuming again that it will be weak.  This is all predicated on a tepid market reaction today.  The testimony is still in progress, and this could just be the calm before the storm.  Money has been pulled out of both stocks AND bonds.  This only happens in a few scenarios, one of them being attributed to a "wait and see" mentality.  So traders are waiting to see how this testimony will turn out and more importantly, especially when it comes to lemmings, they are waiting to see what the other lemmings will do with their money after the testimony is over. 

 
Half the heard could go one way and half the herd the other, but if they all start running in the same direction, we could experience an insane amount of volatility later today.  If stocks tank, it will help mortgage rates today, but my looming concern is that the inflation boogie man seems to be rearing his ugly head again.  Remember that inflation hurts mortgage rates.  With oil important prices extremely high, and FED rates showing the potential to go extremely low, inflation is now becoming a concern that can no longer be ignored.  Considering the mortgage market is already within 1% of all time lows, this will represent extreme resistance to rates moving significantly lower in the short term.

Float today, look out for a Dow Rally or an "up to the minute update" on this site.