Stocks and all major indices relating to the equity market are trading  at 12 year lows, hurting your 201K but helping our mortgage pricing.

Sometimes the burden seems more than one can bear; it’s not dark yet, but it’s getting there.  -Dylan

The sharp sell of in stocks (Dow down 212 at 6841) has driven the flight to quality crowd off the couch (10 year note up 38/32’s).  Mortgage backs have seen a nice bounce, up 9/32’s as we speak.  Consumer spending rose .6% this morning, better than market expectations while Income was up .4%.  After adjusting for taxes and taxes, real disposable income rose 1.5%, the largest increase since May.  Good sign that the patient (consumer) is coming off life support.

Construction Spending was also released, down 3.3%, double the expectations.  Cutbacks in State, Federal, and Local  building took the legs out from underneath this index.  Last on the docket, February ISM (Institute for Supply Management) rose to 35.8 form 35.6.  The employment component fell however to 26.1, a new record low.  The lack of inflation within the index is a bright spot, along with the index itself starting to level off.  The week ahead will be chocked full of data, starting with Pending Home Sales tomorrow, ADP Employment estimates and the Beige Book on Wednesday, Weekly Claims and Factory Orders on Thursday, and Big Daddy, the Employment Report for February on Friday.

Big week usually means big volatility so buckle up.  Technically, the market when right to cliff (once again) but didn’t jump.  Buying has pushed through the resistance level below 2.99% which in itself is a good sign but not a savior.  Think of this as more of a stabilizing move, one that should keep the market close to current level or doing a little better.  The stability should take us right through the week until Friday’s market mover (Employment Report ) hits the tape.  More on our guess this Thursday.  For now, take advantage of the mini rally.

The Ides of March are upon us.