Markets: We’re down 65bps and switching from watching the 4.5% FNMA bond to watching the 5.0% bond, because we always watch the bond that is closest to par.  The 200bp decline over the past 5 days puts the 4.5% out of range.  Correct.  That is not good news for mortgage rates.  Not in any possible sense.

Analysis: What happened was the job loss wasn’t nearly as bad as it was expected to be.  This is further evidence that the economy is pulling out of the dive, and while a large rise in GDP doesn’t seem to be in the cards, it is possible that we are momentarily hitting the bottom.  Expect to bounce here for a while, but Americans being who they are, they’ll be buying stocks whenever things are not manifestly awful, meaning they’ll be selling bonds, meaning interest rates will rise.

Although, you know, rising interest rates puts downward pressure on home prices which is BAD news for the market which will hurt stocks and help bonds, which will drive interest rates down which will help ome prices rise which will be good news which will be a buy signal for stocks which will hurt bonds which drives interest rates up, and around and around the mulberry bush we go.

We’re still locking everything in sight.

Cj