Isn’t it funny what a trillion dollars can do for you.  Well, that’s what the European Union threw at countries such as Greece, Spain, Ireland, and Portugal in a move that mimicked what our Federal Reserve and Treasury departments did a little over a year ago.  Stocks took off in stealth fashion across the globe.  When stateside trading opened in NY, the Dow jumped 400 points at the bell.  Currently, the Dow is up 406 while the Naz is plus 102 points.  Too early to call the close which will be important.  We’ll want to see if traders are buying the bailout given passage is still needed by all 16 countries and the austerity measures (wage cuts, layoffs, retirement age rising, etc. etc.) have yet to be implemented in Greece.  They (citizens) could just be taking a rest before the street fighting once again begins.  Overall, the move has hope and removes a negative for growth round the globe.

Bonds, notes, and mortgage backs have felt the pinch but mortgage backs have held up quite nicely.  10 year note is off 33/32’s (yield 3.55%), 30 year bond is off 74/32’s (yield 4.42%), and yet MBS are down 8/32’s.  The week ahead is light on data with Retail Sales, Industrial Production, and Michigan Sentiment survey being the heavy hitters on Friday.  We will however have supply to contend with this week as the Treasury auctions 38 billion of 3 year notes tomorrow, 24 billion of 10 year notes on Wednesday, and 16 billion of the 30 year bond on Thursday.  Stock pricing and movement will hold the key to how well the paper is received.

Technically, the weakness today has taken the chart back to pre-Europe chaos levels and forced sell signals to emerge on 60 minute charts.  Daily charts however are not giving us a new bear trend.  When you have this type of divergence, the market is trying to tell us that it will take time to show it’s true colors as nothing is in harmony.  In English, this means that Austin mortgage rates and pricing can go one way or the other in short order but most likely hold steady at current levels.  Best to stay on defense as stocks certainly look better, Europe looks better, and the Federal Reserve Chairman hints of Fed Funds rate hikes sooner than later.  Personally, we like the chart (better chance of lower Austin mortgage rates/better pricing) but the fundamentals (economic data) points to a steady recovery.  A tug of war for Austin mortgage interest rates seems in the cards.