TWICE IS NICE, BUT THREE TIMES IS THE CHARM…And for the third time in a row, a nice healthy US Jobs Report hit the streets last Friday. New job creations for May came in slightly higher than expected at 248,000, but even more important were last months revisions, showing April job creations sharply higher, with a gain of 346,000 from an original report of 288,000. All told, the last three months' gains total a whopping 947,000 new job creations!

So what happened to Bonds and interest rates after the highly anticipated numbers were released? News that underscores a strengthening US economy normally tends to push Mortgage Bonds lower and home loan rates higher. But since the last two monthly Jobs Reports had established a very positive trend, there was already a good bit of optimism built into the market. This third Report made the strong job growth “trend” into a “pattern”. This time, instead of Mortgage Bond prices dropping like a wet taco, as has been seen after the past two Jobs Reports, they jitterbugged up and down, but finally closed only slightly lower on the day. In advance of Friday’s big news, rates see-sawed slightly during the week but ended up basically unchanged.

RUBBER AIRPLANES AND 3500 TONS OF SOAP? IN OBSERVANCE OF THE 60TH ANNIVERSARY OF D-DAY, THIS WEEK THE MORTGAGE MARKET VIEW STEPS OFF THE BEATEN PATH, AND SHARES SOME LITTLE KNOWN FACTS ABOUT THIS FAMOUS DAY IN HISTORY. TRUTH OR FICTION? YOU DECIDE…

So with the chatter of a “jobless recovery” diminishing to a whisper…what happens next? Any doubts of the Fed making an increase to short term interest rates have vanished, and it certainly appears inevitable that a .25 to .50% hike will be delivered at the next FOMC meeting scheduled for June 30th. Remember that there are many different types of interest rates, and the Fed manipulates the Federal Funds Rate, an overnight lending rate between banks, not interest rates for mortgages. Many people – including some of the national media – believe that when the Fed “raises rates”, there is a direct correlation to rates on first mortgages. Not true. In fact, when the Fed finally does give the Fed Funds Rate a hike, it should ease the inflationary market pressures and surprisingly give Bonds a boost, which would reduce rates on mortgages.

This week, Chairman Greenspan will be testifying before an international monetary conference on Tuesday, but will also be reapplying for his job on Thursday during his re-nomination hearing for his 5th term before the Senate. No one doubts he is a “lock” for his fifth straight term, especially in light of Friday’s strong Jobs Report. The process will likely be smooth as glass, but the potential for some discussion about rising inflationary concerns is very real. As always, Mr. Greenspan’s words carry weight, and could impact Mortgage Bond trading this week.

Bottom Line: In the absence of unforeseen news, rates on mortgages should remain largely unchanged.

D-DAY. It is hard to even imagine the scope of this decisive battle that eventually led to ending Hitler's dream of Nazi domination. Operation Overlord was the largest air, land and sea operation ever undertaken before or since June 6, 1944. The casualties were tremendous, yet due to planning and preparation, and most of all the valor, fidelity and sacrifice of the Allied Forces, Fortress Europe had been breached.

But did you know…?

Hitler Sleeps In on D-Day

When Allied forces landed in France on June 6, 1944, commanders feared they might face deadly German Panzer Tank divisions. But Hitler had taken control of the major part of the Panzer reserves and wouldn't let them move without his permission. Since he always slept late and nobody dared wake him, by the time the Panzers were released, it was too late.

An American Noah

Louisiana entrepreneur Andrew Jackson Higgins first designed flat-bottomed boats in the late 1920’s to rescue Mississippi River flood victims. Higgins tried for years to sell his boats to the US military, but he was rejected repeatedly. At last, the Marine Corps selected the shallow draft boats for troop landings on Pacific beaches. Higgins, who had paid heavily out-of-pocket to promote his boats, finally landed the government contract. His factories produced 20,000 of the versatile craft for the war effort – including D-Day.

Rubber Planes?

A French general fooled German recon planes by placing rubber aircraft, dummy soldiers and balsawood tanks under their flight paths to give the appearance of a larger force.

Fake German Cities

The Germans were wise to these tactics, and actually created huge reproductions of Berlin, Hamburg and other key cities. They located these “dummy cities” close enough to the real locations to try to fool overhead Allied forces, but far enough away to avoid damage. Berlin alone had five copies of itself scattered across the German countryside.

Weather Delay

D-Day was originally scheduled for June 5th, 1944, but was delayed 24 hours for weather.

Buying in Bulk

War planners had projected that 5,000 tons of gasoline would be needed every single day, for the first 20 days after the initial assault. They also projected that 3,489 TONS of soap would be required for the first four months occupation in France. And speaking of bulk, another WWII tidbit - the US Navy had a ship in the South Pacific whose sole purpose was to make ice cream, and it could produce 5,000 gallons of ice cream an hour.

The Meaning of the “D”

Ever since June 6, 1944, people have been asking what the "D" in "D-Day" means. Many guess “decision", as the day that 150,000 Allied soldiers landed on the shores of Normandy was certainly decisive. And with ships, landing craft and planes leaving port by the tens of thousands for a hostile shore, it is no wonder that some would call it "disembarkation" or "departed."

There is not much agreement on the issue, but the most ordinary and likely of explanations is the one offered by the US Army in their published manuals. The Army began using the codes "H-hour" and "D-day" during the war to indicate the time or date that an operation would start. Military planners would write of events planned to occur on "H-hour" or "D-day", long before the actual dates and times of the operations would be known, or in order to keep plans secret. So more than likely, the "D" may simply refer to the "day" of invasion.

In addition to the Greenspan speeches mentioned above, the most influential reports for the week include Initial Jobless Claims on Thursday followed by the Producer Price Index (PPI, Core PPI) and the University of Michigan’s Consumer Sentiment Index on Friday.

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

For the week of June 7 – June 11, 2004