Mortgages saw a bit more activity last week, much of which was more supportive than it had been lately. Early week buying began to seriously emerge when rates backed up modestly on the stronger-than-expected ISM report released on Tuesday. The number came in at 54.7 versus previous expectations of 51.1. It was also the highest reading in 11 months, thus it raised market concerns about inflation, which were somewhat eased by last Monday's PCE report.
The better buying interest extended through midday Thursday with near-term supportive events encouraging the support. Typically, mortgages benefit from the decline in volatility that tends to follow the release of the employment report. In addition, the reinvestment of paydowns is usually close to this period as well. In this case, paydown information will be available on Monday. Finally, there is one other potential source of support and that is pool notification that begins on Thursday for 30-year conventionals.