Please Note: We are going to combine our Morning Outlook and Market Commentary into one daily email.  The Morning Outlook is designed to give you an update on the most recent movements in the mortgage market and the Market Commentary is designed to give you a longer term perspective on events which could affect your business.  Enjoy and thank you for taking the time to read these!
Daily Quote:  Your life begins to change the day you take responsibility for it.
Morning Market Outlook
Lock it up! No you lock it up!  That’s exactly what Greece did this weekend taking a page out of Wedding Crashers and locking up their banks and limiting withdrawals and transfers to avoid any frantic run.  A run on the banks would precede a different kind of crashing that wouldn’t be any fun at all.  Suffice to say not a whole lot of progress has been made and the clock runs out tomorrow.   This had MBS up 16 tics at the high and we’ve retreated down to +13 on the morning. Most investors will already have this priced in their morning sheets so don’t hold out for a re-price. 
Pending Home Sales came out this morning May’s activity came in at a nine year high.  The Index reached 112.6 the highest level since April 2006 and to think we didn’t even need income or assets in those days!  My how the world has changed.
It’s a short week so we can just put it on auto-pilot right?  Not so fast my friend!  Short holiday week with Jobs coming in on Thursday and a looming Greek tragedy spells…..VOLATILITY
10yr T  - 2.386
30yr APOR – 4.08
Warning: July 4th Fireworks Got Nothing On This Weeks Firepower
For those of you wondering when the Fed would begin raising interest rates (and if you are a Mortgage Participant that had better include you!) this week will give us some much needed guidance we've been looking for.  Coming one day early due to Independence Day celebrations, Jobs Friday will be released this Thursday promptly at 8:30 a.m.  You've heard me say this myriad times before but this is THE MOST IMPORTANT data point there is right now.  Last month's surprise to the upside in terms of new jobs created (for May) unleashed a bond market selloff that made the NY Knicks 1st round draft picks look pretty.   Another strong jobs data release this Thursday will undoubtedly cause even more pain.
So What Does This Mean For Mortgage Participants?
It means there an asymmetry in the bond market which will cause rates to go higher on a strong jobs number than they would go lower on a weak jobs number.  Huh?  Basically, interest rates will sell off much worse if we get a number that exceeds 280,000 jobs (the market consensus) than they will rally if we get a number less than 280,000.  Why?  The Fed claims that jobs are still one of the weaker points in the economy and back-to-back strong numbers will weaken that point of contention.  Bond market players will not want to be the last man standing after the music stops and will begin selling...and selling.  That goes for equities too I suspect.
Now should we get a weaker jobs number, say something below 200,000, these same market players will have to assume this is a one-month aberration and while there will be a bond market rally and some short covering it won't be of the same magnitude as we'd see should we get a sell off.
So my very strong advice, as direct as this might sound, is that you are neither smart enough nor paid to speculate on interest rate movements.  So I strongly encourage you to lock your loans IF you have a qualified borrower and a complete submission.  You've been warned.
Economic News/Activity:

Time Release Period B'Berg Survey Actual Prior Revised
 10:00 Pending Home Sales MoM May 1.30% -- 3.40% --
 10:00 Pending Home Sales NSA YoY May 11.80% -- 13.40% --
 10:30 Dallas Fed Manf. Activity Jun -16 -- -20.8 --


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