The 200-Day moving average has been a great support level for mortgage bonds keeping rates low for the past few months, but today bonds fell below this key level of support on the news that costs to manufacturers (PPI) came in higher than expected. Tomorrow we will find out if manufacturers have been able to pass those higher costs on to the consumer with the releasee of the consumer price index (CPI). Higher costs will translate into inflation which has remained tame up until recently, but inflation is a real concern going forward based on the governments actions to keep rates low and borrow at a very unsustainable pace. Inflation is the enemy of all bonds as it erodes the value of a bonds interest payments. I have been blogging for several months now that I expect rates to begin their climb before the MBP ends at the end of March. It now looks like some of the Fed presidents not only dont want to extend that program, but want to actually start to sell the bonds they have been purchasing over the past 14 months which would put further pressure on bond prices and thus could push rates up even faster. A lot of moving parts these days with interest rates...stay tuned. If you have been holding off on a purchase or refinance....STOP WAITING! The rates today are the best will we see in a long~LONG~time.