Following a rather boring day on Monday, volatility picked up a little yesterday as the second quarter officially ended.  Mortgage backed securities followed treasuries to higher yields.  Most lenders did reprice for the worse increasing consumer borrowing costs by .25 in discount.   So far this morning, the downward pressure on MBS and treasuries continues as the benchmark 10 year note has moved to a yield of 3.59 after closing at 3.47 on Monday.  Though not always in direct relationship, this upward move in treasury yields is leading MBS in the same direction.  We're down .25 in discount so far this AM.  Remember, as PRICE falls, YIELD rises.  The "price" falling means that investors are requiring higher yields (interest rates).  This comparative increase in yield is passed on to you the consumer either in higher rates or higher discount points.

 We do have a busy day of economic reports which will set the stage for the most important monthly report, the Employment Situation, which we get tomorrow ( a day early as markets are closed Friday).   The first report to hit the wires is the weekly Mortgage Bankers' Association Applications index which tracks the weekly change in mortgage applications at banks.  The report has indicated a steep decline in mortgage activity.  First, the purchases index registered a 4.5% decline signaling no improvement in purchase activity and the refinance activity dropped a whopping 30%!  Many think lower mortgage rates are vital to our economic recovery in order to spur home purchases and increase consumer spending capacity through refinancing.  So this report is not the best news for the economy but it isn't a major market mover. 

 We received a couple reports this morning regarding jobs, but these reports take a back seat to tomorrow's Employment Situation.  First out is the Challenger Job-Cut Report which indicated that layoffs at corporations decreased from 111,182 to 74,393, the lowest level since the start of the recession.   The second report on jobs is the ADP Employment report which is similar to the official Employment Situation report we get tomorrow but consists of private payrolls (non government, military, etc...).  Historically, this report has varied greatly from the official report but it's accuracy is improving and investors are starting to give it a little more attention.    Expectations were for ADP to report job losses of 400,000 but the actual report indicated a loss of 473,000 jobs.   Here is a graph from Bloomberg that illustrates the difference between the two reports.