Prospect Mortgage – Daily Rates June 11th, 2009

Good morning!

MARKET UPDATE:  Yesterday saw the 10 year note yield over 4% for the first time since last October after the treasury auction of the 10 year note.  Today at 1:00 pm EST we have another $11 billion auction of 30 yr bonds; today the 30 year already stands with its highest yield since October 2007.  With all the new debt hitting the market and diluting our dollar, inflation fears are the most rampant on these longer term securities (i.e. 10 and 30 year bonds) and unfortunately mortgage backed securities fall into this group.  Retail sales, Initial Claims, and Business Inventories data all read relatively in line with expectations and have had little effect on the market this morning. Business inventories for April declined 1.1%, which is slightly steeper than the 1.0% downturn that was widely expected. Meanwhile, business inventories for March were downwardly revised to show a 1.3% decline. Oil prices are currently up 0.5% to $71.70 per barrel in the first few minutes of pit trading, though it had eclipsed the $72 per barrel mark earlier in electronic trading. The upward move has been supported by a slightly improved 2009 global demand forecast from the International Energy Agency. As for Treasuries, the yield on the benchmark 10-year Note is only a few basis points below the 4% level as the Note trades near the unchanged mark. It could see some volatility with an $11 billion auction of 30-year Bonds scheduled for later today;

Quotes of the Day,

The credit belongs to the man who is actually in the arena; whose face is marred by dust and sweat and blood; who strives valiantly; who errs and comes short again and again; who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement; and who at the worst, if he fails, at least fails while daring greatly…

       Theodore Roosevelt

Remember you will not always win. Some days, the most resourceful individual will taste defeat. But there is, in this case, always tomorrow – after you have done your best to achieve success today.

       Maxwell Maltz

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