Based on the results of today's two year note auction ($35 Billion in Treasury Notes) we can shift to FLOATING. The last few rounds of 2, 5 and 7 year note auctions have not been very successful and the combination of soft demand and excess supply has been a drag on prices. The fact that the FED's QE II program is set to end soon has bolstered the dollar. This has reduced inflation pressures and the European debt markets have once again spooked the world so we could see a pretty good run up in pricing provided a few things happen: 1) Tomorrow's 5 year auction goes well, and more importantly, Thursday's 7 year auction needs to be well received, too. It seems that popularity of Treasury Auctions has shifted to the 3, 10, and 30 year notes and the 2, 5 and 7s have not gone especially well. If that momentum changes then we could see better pricing on Thursday, or Friday Morning; the holiday weekend also should bring some flight to quality because Traders do not like to hold riskier positions during long holiday weekends with the high level of global volatility (particularly in Libya and the Middle East). It is always important to be cautious when floating your loan because the market can go in either direction. We are currently unable to break through stiff resistance at the 200 day moving average and have not closed above this level since last November when rates were in the low 4s (30 year). There is equal potential that we could pull all the way back to the 25 day moving average. Most traded items (stocks, bonds, securities) do not tend to "run too far away" from this level and when they do, a sell off is likely (and rates would get worse).

Stocks started higher as the dollar sold off. Since raw materials are traded in US Dollars, Gold, Oil , etc and their corresponding stocks tend to rally when the dollar falls and the price of the goods goes up. The dollar reversed back to positive and even though Gold and Oil are still up on the day, stocks turned modestly lower.

If you are in the market for a home or thinking about it, please contact me and we can discuss affordability and the potential to get the best of all worlds. Buying a home in a down market with a historic low rate! There are many strategies to the new age of "your home as an investment" and I can assist you with a strategy that will position you better than you ever thought possible. You can reach me on my web site at www.rglovermortgage.com and American Portfolio Mortgage Corporation in Palatine, IL is an IL Licensed Mortgage banker that does business throughout the Chicago Metropolitan area.