Mortgage Market CommentaryMortgage backed securities (MBS) prices are near unchanged (rates stable) in volatile trading.

Durable Goods Orders unexpectedly rose 3.4% in February on a rebound in demand for machinery, computers and defense equipment; the biggest gain in over a year and the first in 7 months. However, there were large downward revisions to January and December basically offset the positive report.

New Home Sales surprisingly rose 4.7% in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Mortgage applications surged 32% as 30yr fixed rates fell to 4.63%, the lowest in 60 years. The drop in borrowing costs helped spur a wave of refinancing.

The Fed starts purchasing long term Treasuries today, aiming to bring down consumer loan rates further. The strategy carries risks of higher inflation in the future. The Treasury auctions $34 billion 5yr notes today, raising concern record amounts of government debt will overwhelm demand. Stocks are higher with the DOW, S&P 500 and NASDAQ up over 2%.