Mortgage bonds are starting the week in rally mode. Treasury Secretary Paulson affirmed to wall street that the government will not allow Fannie Mae and Freddie Mac to fail.
Busy economic calendar this week. The Producer, and Consumer Price will be published Tuesday & Wednesday respectively. Any signal of inflation will move rates up.
Also on Wednesday, the Fed meeting notes will be released. This can often move rates as the market gets further insight on the Fed’s thinking.
Later in the week, the health of the manufacturing sector via the Philly Fed Report is announced. A weak number will be provide further support for mortgage bonds and likely move rates lower.