Happy Easter,

Government debt prices dropped Thursday as stocks rallied on Wells Fargo's first-quarter profit forecast.

The San Francisco-based bank said Thursday that it expects to post a profit of approximately $3 billion for the most recent quarter, surpassing estimates. The news sent the Dow Jones industrial average jumping as much as 200 points as investors hoped that the banking sector might be headed for recovery.

When investors feel more confident about the economy, investors move out of the security of Treasury’s. The Labor Department said the number of people who filed for initial claims in the most recent week fell by 20,000.

What does this mean to us? Rates can very easily move up now (I know that you may disagree with me). With the stock market starting to pick up some steam again, consumers and institutional investors will exit the safety of federal T-Bills and move back into equities (stocks). Therefore, the bond market must raise their rates to attract more investors into the market. When they raise the rates on bonds, the rates for mortgages go up.

Are we talking large increases? Probably not. But, maybe we have seen rates as low as they will go. Only time will tell. Either way, anyone who complains with 4.75% as a rate is definitely confused.

I hope that you have a blessed Easter. Let us know if we can help in any way.