Risk of floating is high

Today at noon, the Fed will release their Minutes from the March 18^th Fed Meeting.  The markets will be listening for any clues as to when
interest rates will begin to move higher, as well as the Fed’s thoughts on the job market and the pace of inflation going forward.  Historically,
Fed Minutes create additional volatility within the markets which leads to upward pressure on mortgage interest rates.  Therefore, we must exercise
caution today, as mortgage bonds may react negatively to the news.  Although bonds have been down most of the morning, we are seeing the losses
accelerate as we get closer to timing of the release. 

Mortgage Application Data for last week was released this morning.  The report shows that Purchase Applications are up 7% and are now up 12% compared
to this time last year.  In fact, purchase volume is at the highest levels seen in almost two years.  This is great news and a welcome sign
as we enter the home buying season.  With mortgage rates remaining at low levels, combined with an increased level of activity, it is shaping
up to be a healthy summer purchase market.

Given the increased volatility created by today’s Fed Meeting Minutes release, we will maintain our locking bias.  Mortgage bonds continue to trade
in a wide range.  Until bonds determine the direction they will be moving, the risk of floating will remain high.  Both stocks and bonds
are lacking a clear pattern.  At some point, a decision will be made and we will see movement.