Daily Mortgage Update

Mortgage rates remain at higher levels

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By the time the bond markets closed, Treasury yields had edged downward a little further. This, however, has not yet influenced mortgage rates, which continue to inch upward.

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In Wednesday's only economic report, the Institute of Supply Management, or ISM, index on the retail sector for March came in a bit stronger than expected. The index rose to 60.5 from 60.1 - not much of a change - but analysts were predicting a decline to 59. Bond traders, however, received the news without flinching, as the 'prices paid' component actually edged down to 60.5 from 64.8. Any increase in prices is looked on as a possible sign of inflation, which is the archenemy of fixed-rate assets. The employment index also fell, while new orders showed a slight increase.

Stocks in rally mode

A decline in Treasury yields, the prospect of a good employment report on Friday, strong economic news and a boost from Apple Computer Inc. sent the three major stock indexes up on opening. Though they wobbled along the way, they closed with good gains. Wall Street applauded the notion of an end to Fed rate hikes and the ISM report. Apple's announcement of Boot Camp -- software that will allow Macintosh users to run Windows XP on Intel-based Macs really stirred the markets -- spread optimism throughout a number of sectors. Apple added almost 10 percent today, giving the Nasdaq a huge boost, and Google continued to rebound. Chips and networkers led the techs, but oil stocks and retailers also put up good numbers.

Homebuilders rallied on a report from the National Association of Realtors that showed a 16 percent increase in the sales of second homes in 2005. This translated into a whopping 39.9 percent of all existing home sales last year.

The Dow Jones industrials were led by Alcoa, which added 2.5 percent prior to its quarterly earnings, which will be released on April 10. Traditionally, this report kicks off earnings season. GM slumped early due to March sales that fell 14 percent, but the automaker snapped back to close with a 1.9 percent increase. Hewlett-Packard gained 2 percent and Merck added 1.4 percent, to round out the top gainers on the Dow. Ten components closed in negative territory, but losses were on the modest side.

As of 4 p.m. EDT:

The Dow Jones industrial index closed up 35.70 points (+0.32 percent) to 11,239.55; the Nasdaq composite gained 14.39 points (+0.61 percent) to 2,359.75, and the Standard & Poor's 500 index rose 5.63 points (+0.43 percent) to 1,311.56.

The 30-year Treasury bond closed up 6/32 in price with the yield falling to 4.89 percent, down from 4.91 percent on Tuesday.

The 10-year Treasury note closed up 6/32 in price with the yield falling to 4.84 percent, down from 4.87 percent on Tuesday.

The five-year Treasury note closed up 4/32 in price with the yield falling to 4.79 percent, down from 4.82 percent on Tuesday.

The two-year Treasury note closed up 1/32 in price with the yield falling to 4.80 percent, down from 4.82 percent on Tuesday.

At 4 p.m. EDT, average mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year conventional fixed-rate mortgage was at 6.23 percent, up from 6.211 percent on Tuesday.

The 15-year conventional fixed-rate mortgage was at 5.911 percent, up from 5.86 percent on Tuesday.

Coming up:

Thursday features the weekly report on first-time jobless claims. Analysts are expecting an increase of 3,000 benefits applications to 305,000 for the week ended April 1. If the increase comes in on target, the markets will take little note of the report. They will, however, be totally focused on the employment report for March, which is due Friday.

Wednesday's slight decline in Treasury yields will not likely be enough to move mortgage rates to lower levels. Therefore, overnight and into Thursday they might edge down but they should remain steady.

Carolyn Siegel

Carolyn@interest.com