This morning jobless claims came in much better then expected.  Economists where expecting 550k, but the number came in considerably better at 492k.  The 4 week average fell as well to 552k, but continuing claims came in higher at 4.5 million.  Normally, this would be bad for mbs, but it appears investors are shrugging off this report.  Could be that they don’t believe it since it was much better.  Currently mortgage backed securities are trading unchanged from yesterdays going out levels of 5pm eastern. 

The big news yesterday, which caused a huge turnaround in mbs pricing, was the Fed released details of the $500billion mbs purchase program.  Basically the important part of the release was they said the buying will start first part of January.  This will help to keep interest rates on mortgages extremely low for most of 2009.  Once the actually buying starts, we will see continued improvement in price resulting in lower mortgage rates.  This is one of the big reasons why we have had a float stance if closing in January or beyond. 

Today the bond market closes early at 2pm and will be closed all day tomorrow but will reopen Friday for a normal trading day.  I suspect lenders will be quite conservative on the rate sheets this morning due to a shortened day and a holiday tomorrow.  Float club is in session and lets hope on Friday lenders start to pass along the improvements we have been seeing. 

There will be no update tomorrow but will be back to you on Friday.  I will repost later as conditions warrant.  I wish everyone a safe New Year’s Eve, and if you are going to be drinking tonight, please assign a designated driver.