If You Blinked . . .

If you blinked, you missed it and that was last week’s 11.1% rise in the purchase component in the weekly MBA data, a 3 month high, as today the MBA said it fell back down by 11.3% and is just 1% above the level right before the Fed announced their MBS purchase plan. This is even as mortgage rates remain near record lows at 4.7% for a 30 yr. Refi’s for the week fell by 10.9%.

Yes, one can argue that the housing sector would be much worse if rates weren’t this low but is flooding the Fed’s balance sheet of tough to sell longer term MBS worth the cost especially after seeing how effective lower prices are in spurring foreclosure purchases.

The 25%+ rally in equities off the low has successfully turned sentiment as the weekly II data reveals that Bulls rose to 43.2 from 36, a hair above its highest level since June while Bulls fell to 34.1 from 37.1 to the lowest since the 1st week in Jan. Y/o/Y CPI is expected to fall for the 1st time since ’55.

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