Looking to future Fed meetings, the previous feeling was that this may have been the last of the rate hikes for the time being. However, recent financial news shows that wages are rising and that the unemployment rate is now at 4.7% which is the lowest in 5 years. These are both inflationary indicators and it now seems very likely that Bernanke will raise rates in March and then possibly again in May. Let me stress again that now is the time to get that HELOC locked into a fixed rate second mortgage.

As far as isssues impacting longer term bonds which have more of an impact on 1st mortgage rates…. There is much going on there as well. First of all, the government is in the process of selling another $188B in bonds to fund shortfalls in Medicaire and Medicaid. The President last week asked for another $120B to fund the war on terror. And, finally, the 30-year treasury bond comes out of hibernation this week for the first time since 2001.

There is a lot of talk out there that the new 30 year bond will compete with mortgage bonds for new money and in turn cause a decline in price of the 30 year bond and a subsequent increase in mortgage rates. There may be some truth to this, but the small size of the new offering (about $15B) will likely be absorbed by the market with little impact to long term interest rates.

This week's calendar is light:

Wed. February 08
09:30 Crude Inventories

Thu. February 09
08:30 Jobless Claims (Initial)