The boss was complaining in our staff meeting the other day that he wasn't getting any respect. The next day, he brought a small sign that read:

"I'm the Boss!"

He then taped it to his office door. Later that day when he returned from lunch, he found that someone had taped a note to the sign that said:

"Your wife called, she wants her sign back!"

Where does your production stack up to Countrywide’s? Their ARM volumes (consisting of fully adjustable-rate mortgages and hybrid adjustables) for May were $10.7 billion, or 24% of total originations (the lowest level since 2003). Option ARM production decreased to $2.3 billion, down 15% from last month and down 65% from the year-ago level. The drop in Option ARM levels is consistent with industry trends.

Yesterday, and into last night, the yield on our friend the 10-yr got into the low 5.30’s! Although it has dropped back into the mid-5.20’s, the rise in rates is splashed across the press and contributing to a slowdown in the stock market. There is speculation that central banks around the world will raise interest rates to keep inflation in check. What inflation? There's a “perception” that the growth and inflation outlook will prevent the Fed from cutting rates this year, and the sentiment is very bearish.

This morning’s Retail Sales number didn’t help, coming in much higher than expected at +1.4%, ex-autos +1.3%. So folks are definitely spending more money on consumer goods, as this number is the highest it’s been in over a year! Is there a silver lining? Higher mortgage rates may be luring some borrowers into locking in their interest rates now for fear that rates could continue to increase. We still have the Fed's Beige Book, which will be analyzed to better understand issues currently pressuring us, but Wall Street firms report that the selling has approached panic stages in the last two days after rates have shot up 60 basis points in the past three weeks.