Corroboration of the prepayment threat came today in the Mortgage Bankers Association Application Survey. Low oil prices also bolstered Treasuries. The American Petroleum Institute reported yesterday evening that domestic inventories of both crude oil and gasoline rose last week by more than analysts had expected. Stocks moved off early lows, led by the tech sector. The CEO of Cisco Systems said that he was comfortable with analysts' earnings projections for the company.
Government spending is an economic stimulant as is the tax cut that has already been enacted.
Of course the Fed has provided more fuel with nine rate cuts so far this year. Tomorrow the economic calendar includes the release of the weekly initial jobless claims report. The report issued last week showed claims at a 9-year high the week before and the level is expected to be as high or higher in tomorrow's release. Regardless of the number for last week, the pace of layoffs is expected to accelerate and unemployment is expected to climb. Also due tomorrow is the factory orders report for August.