WEDNESDAY MORNING .......................................2/13/08

Retail Sales figures came in higher than expected today at .3% improvement.  Expectations were for a .3% decrease.  This signal of potential economic strength  is helping stocks to stay on the positive side today and is a very slight thorn in the side of mortgage rates.

Currently Mortgage Backed Securities are worse by about 4/32nds, which is causing most lenders to have worse prices today by about .125% discount points.

Lock recommendation.

The market has not responded as much as one would normally expect considering the stronger than normal retail sales numbers.  Part of this could be due to fact that auto sales played a large role in the improvement.  Additionally, the markets will probably need more convincing that we are not headed into a recession.  Tomorrow brings the relatively important international trade numbers as well as jobless claims.  If the markets were to receive two days in a row of recession-easing numbers, the impact on mortgage rates will be negative.  As stocks and bonds are holding relatively steady on the day (their range from low to high is very tight), you are probably safe to float through the day until the market, or this commentary gives you a reason to lock.  At the end of business today, locking is the safest bet if you have a loan closing soon. 

Tomorrow will be very telling if the positive news for the economy continues.  Personally, I don't see how we can avoid weakness in the mid-term and thus have mortgage rates go a bit lower than where they are currently.  As always, the tricky part is deciding WHEN that will happen.  It could be 2 days, 2 weeks, or 2 months.  The factor that makes the time frame so hard to predict currently is volatility.  The markets are panicked about recession, so ANY news good or bad causing immediate and sometimes exuberant change.  Caution is the safe play here, but float today.