Crude Driving Market Down - Mortgage Rates Following

Markets again taking a beating.  Crude continues to drive all markets as we saw this morning crude is again lower sending global and US stocks down again. Yesterday the US markets traded quietly as we saw no real change in stocks, bonds or MBS prices (although MBS prices were off 10BPS).

The Stock indexes are again taking a hit and we now have the 10yr at 1.96% and MBSs a positive 29BPS from yesterday, and it is only 10:00AM.

Two economic releases this morning showed the December CPI not meeting expectations, but really is not a market mover.  December housing starts and building permits were strong are above expectations.  One report that I usually do not mention, that being the weekly MBA mortgage applications.  They had increased last week by 9%, but more was for refinances than purchases, and I expect this trend to continue as rates again fall.

Interest rates and stocks still declining.  I expect the 10yr note yield to eventually drop, but will it hit what some are saying, 1.50%?  I think that we may see 1.60%, but I am not the expert trader. Markets are way too pessimistic now as everyone now is on one side of the boat - when that happens in any markets reversals can occur. That said, the more macro picture remains bearish for stocks and bullish for interest rates. The DJIA down about 10% from recent highs, likely will drop at least 20%.