“In my view, if policy makers insist on waiting until the level of real activity has plainly and substantially returned to normal – and the economy has returned to self-sustaining trend growth – they will almost certainly have waited too long”.

Hawkish remarks from Fed Governor Kevin Warsh has added a new wrinkle to yesterday’s friendlier than expected FOMC statement.  That op-ed piece, along with both bullish and bearish economic news, sent markets on a roller coaster ride for much of the day.  With the dust now settled, the 10 year note closed up 16/32’s (yield 3.32%), stocks finished down 42 points on the big board, and mortgage backed securities gained 6/32’s on the low rates (4.50% to 5.125%) and 2/32’s on rates from 5.25% on up.

Widening spreads between Treasuries and MBS along with a flatter yield curve were very much in vogue.  Matter of fact, the 30 year bond was up 45/32’s to yield 4.09%.  Although the market ended the day firmly to the upside, the high print (low yield) of last September continues to cap the market.

Technically we have a bullish breakout and most studies favor continued upside (better Austin mortgage pricing).  Even Elliot wave charts and Candlestick patterns have developed bullish trends, bringing almost all trading tools and time frames into harmony.  Trouble is, we do not get much “bang for the buck” in Austin mortgage pricing due to the widening spreads.  Hey, it’s a positive and bodes well for better mortgage levels into next week and it is Friday.  Can’t get much better than that.  We’ll give the market a little room to run into the early part of the week, taking  a neutral/bullish bias into month end.

Have a great weekend.