At the time I am writing this, mortgage interest rates are less than 1/8th lower than they were last Friday.

Both the 10 year Treasury bond and mortgage bonds continue to be contained in a narrow range. With the Federal Reserve(FED) still committed to buying large quantities of bonds through their quantitative easing program rates have not been able to increase much. On the flip side the string of positive economic news we have seen lately has kept rates from dropping.

Earlier today St Louis Fed President Bullard was on CNBC telling investors not to worry, and that the FED is not stopping their quantitative easing program (QE) any time soon. His comments were in response to the release of the January FED meeting minutes which showed discussion on how to wind down QE when the time comes. Any time there is discussion of slowing or stopping QE investors tend to get nervous, but after Bullard's comments market volatility died down.

The $85B of mandatory spending cuts is coming up on next Friday and we have not heard much from either side in Washington on how to deal with it. Surprisingly the market does not seem too concerned with it, either because investors believe it will be avoided last minute or that the impact of the spending cuts will not have a large negative impact on the economy. I would expect to see increase volatility next week as we lead up to the dead line. I believe the only way we will see a drop in rates at this point is if we see a large correction in the stock market which is currently overbought.