What Happened to Rates Last Week:

Mortgage backed securities (MBS) lost -172 basis points last week which helped to move mortgage rates much higher from last Friday to the prior Friday. Traders dumped MBS and Treasuries as the massive Quantitative Easing (QE II) program ended which removed the single largest purchaser of U.S. Treasuries from the market place. MBS also sold off on the much stronger than expected economic news. We saw some good growth in the Chicago PMI and the ISM Manufacturing data, both measure true economic expansion by monitoring our manufacturing sector. We also got a very nice surprise with the Pending Home Sales data.