“HALF THIS GAME IS 90% MENTAL”, SAID YOGI BERRA... and the financial markets sure like to ride the emotional rollercoaster. Last Monday, mortgage interest rates were continuing to suffer from the anxiety that followed the incredibly positive US Jobs Report. But by Tuesday, several factors provided an emotional rescue, which pulled Mortgage Bonds back to their shaky feet and helped to slightly improve interest rates this week. The Bank of Japan (BOJ) had backed away from their massive spending spree on US securities, so fearful emotion ran high that prices would erode without their buying support, causing an increase in mortgage interest rates. But last Tuesday’s Treasury auction, where the BOJ was conspicuously absent, went very well…with much of the buying slack being picked up by other foreign investors. Trading remained light for the rest of the week, as the Bond market closed early on Thursday, and remained entirely closed on Good Friday.

The religious holidays of Passover and Easter – combined with increased terrorist-related news from the Middle East – led to heightened fears of terrorism in advance of these significant holidays and an extended weekend. These fears typically tend to drive money into the safe haven of stable Bonds especially because the long weekend allows more time for bad geopolitical news to occur while the markets are closed. This helped support and stabilize prices last week.

Although Mortgage rates were roughed up again last Monday, they battled hard to recover a foothold…and improved about .125% over the course of the week.

CAN YOU HEAR ME NOW? MILLIONS OF CELL PHONES ARE BEING TURNED OVER AND UPGRADED, WHILE CELL CARRIERS ARE BEING SWAPPED AT AN UNPRECIDENTED PACE. WHAT SHOULD WE DO WITH ALL THOSE OLD, ENVIRONMENTALLY DANGEROUS CELL PHONES? HOLD ON TILL YOU READ THIS WEEKS MORTGAGE MARKET VIEW BELOW

Believe it or not, there was great drama happening on a technical level last week. You might rightly ask the question…”What could be dramatic about the technical analysis of Bonds?” Good question. On a technical level, both Stocks and Bonds typically trade in between “floors” of support, and “ceilings” of resistance that act as barriers…and it takes a good bit of effort to crash down through a floor, or up through a ceiling. These “floors and ceilings” can be formed by many different indicators, but are most commonly seen as the average trading price over the last “x” number of days, known as a “Moving Average”, such as a 50 or 200-day Moving Average. Once a floor is broken, the Bond price will often continue to drop until it can find a new floor of support. As mortgage bond prices decline, mortgage rates rise.

So what happens next? Much will depend on geopolitical events and upcoming economic news. Geopolitical calm and good economic reports will likely push bonds back under the 200-day MA floor, which would result in a case of the blues for bonds and higher rates ahead.

OK, so now I have 3 old cell phones…what do I do with them?

Thanks to rapid-fire advances in technology, which make cell phones smaller and pack them with the latest and greatest features, many consumers are upgrading to new phones at a record pace. They’re not just smaller, they can take pictures, play songs and browse the web, use email and text messaging, voice technology and much more…just ask a teenager.

Additionally, number portability makes it very easy to keep your phone number and switch cell carriers. In fact, an estimated 30 million consumers will switch providers to get a better plan or coverage for their area. But when you switch, chances are that you will need a new cell phone. So with all this switching and upgrading going on, what do you do with your old cell phones?

Old cell phones usually don’t have much monetary value, if any at all. Sure you can just trash them, but they contain environmentally harmful materials like lead and beryllium, which can get into drinking water. A better plan may be to donate your old phone. Some good choices include:

www.charitablerecycling.com - They give the phones away to a variety of people in need, such as battered women so they can access 911. They also provide free phones to patients who are awaiting transplants.

www.wirelessfoundation.org - They provide free airtime to victims of domestic violence.

This week should bring an exciting slate of economic report action. Hopes are heightened, based on the recent good news on the jobs front, and you can bet that Initial Jobless Claims will be looked upon with increased interest on Thursday. Which other reports will be “the ones to watch”? Some interesting consumer-related reports are due, starting with Retail Sales numbers on Tuesday, the Consumer Price Index (CPI) on Wednesday, and the always-fascinating University of Michigan’s Consumer Sentiment Index on Friday. Last months U of Michigan report was investigated upon suspicion of an early leak, just like this month’s dramatic Jobs report. It will be interesting to watch how these stories play out!

Remember, as a general rule, when weaker than expected economic data is reported, it would indicate the economy is not improving as quickly as expected, and could cause mortgage rates to improve. Positive data would indicate a strengthening economic climate, and could cause mortgage rates to gradually climb higher.

For the week of April 12 – April 16, 2004