Financial Insight

 All investors have narrowed their guidelines, and even Fannie Mae will now requires a minimum credit score of 580 on loans purchased for securitization regardless of DU. Many analysts feel that the worst of the credit squeeze is now over. Fortunately, and please check the graph below (thank you Lehman & Bloomberg), credit spreads have tightened in the last three weeks, with many spreads returning to their early February levels, and the tone in the mortgage market has improved as the Fed’s new liquidity initiatives & effectively buying securities backed by mortgages have removed the threat of forced selling from the market.

This week brings us the release of only two relevant economic reports in addition to the minutes from the last FOMC meeting and a Treasury auction. Tomorrow, 11:15PST, the FOMC minutes will be released, which may give us insight into their current thought process and individual Fed member opinions. Aside from that, and the weekly jobless claims Thursday morning, the first piece of monthly data is February’s Goods and Service Trade Balance report Thursday morning. There is a 10 year Treasury Inflation Protected Security (TIPS) sale Thursday. The second and final release of the week is the University of Michigan’s Index of Consumer Sentiment Friday morning. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend, so “good” news would be a decline from March’s 69.5 reading. Ahead of all of that, the 10-yr is back into the mid-3.50’s and mortgage prices are worse by .125.