The Commerce Department reports orders for long-lasting goods climbed 3.3% in April from March, significantly outpacing estimates of a 1.5% increase. Excluding the transportation segment, orders were up 1.3%, topping estimates of a 0.5% increase.

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Sales of new U.S. single-family homes increased 2.3% in April to a 454,000-unit annualized rate, beating expectations of the 426,000-unit rate analysts were forecasting. The median price jumped 14.9% year-over-year to $271,600 – the highest price on record since January 1963.

New claims for unemployment benefits fell to 340,000 last week from an upwardly-revised 363,000 the week prior. Claims were expected to fall to 345,000 from an initially-reported 360,000.

Members of the Federal Reserve’s policy-setting committee saw the U.S. economy as expanding at a ‘moderate’ pace in the first quarter and remained generally steadfast on the need to continue on with the central bank’s aggressive easing program, according to minutes released Wednesday. However, members did discuss the size and duration of quantitative easing – ultimately choosing to hold steady at $85 billion a month in asset purchases.

Early this morning the weekly MBA mortgage applications were out and not a surprise that apps have fallen for the second week as mortgage rates have increased; especially re-finance apps. The purchase index is down 3% following the prior week's 4% decline, a tangible reversal that points to trouble for May home sales compared to April home sales. The refinance index is really showing its sensitivity to mortgage rates, falling 12% after the prior week's 8% drop. The average 30-year rate jumped 12 basis points in the prior week and is up another 9 basis points in the latest week to an average 3.78% (conforming balances $417,500 or less).

U.S. existing home sales rose 0.6% in April from March to a 4.97-million unit annualized rate, slightly missing estimates of a 4.99-million unit rate and the highest level since November 2009, according to the National Association of Realtors.

Federal Reserve Chairman Ben Bernanke will testify in front of the Joint Economic Committee of Congress to discuss the state of the economy and the central bank’s future plans with its $85 billion a month bond-buying program.

The bond market is headed for its first monthly loss since January before St. Louis Fed President James Bullard and New York Fed President William C. Dudley speak today. Fed Bank of Chicago President Charles Evans said yesterday the economy has improved “quite a lot” and he would be amenable to the central bank slowing its asset purchases if he had confidence job growth would be maintained. The Fed publishes minutes tomorrow of its April 30 to May 1 policy meeting. Bullard said last month that unless inflation improved he would favor more QE. If one just followed the various comments from Federal Reserve officials, confusion would be the end result. The only voice that matters is Bernanke’s, but the noise from the other Fed officials continues to roil markets.

This week not much on the calendar this week until Wednesday. Wednesday has two key events and April existing home sales. Ben Bernanke is scheduled to testify to the Joint Economic Committee on the state of the economy and the FOMC minutes from the 5/2 FOMC meeting---both Wednesday. The minutes are always revealing, this time maybe not so much as the meeting was a day before the stronger than expected April employment report. Bernanke’s testimony should be interesting with markets presently debating when the Fed would begin unwinding its QEs, and the economy is debatable with mixed readings being reported almost daily.

Thursday has new home sales for April, expected to be a little better than March. Weekly jobless claims increased 32K last week, this week the expectations are for claims to have declined 12K to 348K. This week leads into the Memorial Day holiday that will likely reduce trading volume as many will add to the holiday. The US bond market remains bearish, Friday the 10 yr closed at 1.95% a level we believe may hold the increase in rates for a while, that said though, there is little reason now to expect interest rates will decline much on any improvements. Beside the economic data, the main concern in the fixed income market now is when the Fed will actually begin to extract itself from supporting the bond and mortgage markets.

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Join us as we explore the week that was and the week ahead.  The economy and look at rates still hanging on in the 3's and in some cases the 2's.  Stop paying your Lender too much...they love you...you do not need this kind of love in your life.  Be aware of FHA guidelines changes starting in June that will influence Your Real Estate Life. FHA also has a PROGRAM that could save you thousands on your current FHA loan without an Appraisal.  A 3% down payment on Conventional financing.  Understand guidelines that will benefit Your Real Estate Life...higher FHA limits and HARP II enhancements allowing you to be underwater on your mortgage...start now!  Find out how low interest rates are today and why it may turn out to be the best time to save the most money.  Even if you refinanced within the last 6 months, you may be able to save more today.  Get started at united4loans.com.

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Treasury bonds got a further jolt as consumer sentiment toward the U.S. economy brightened.  Americans’ confidence in the economy climbed in May to the highest level in almost six years as rising real estate values and record stock prices boosted household wealth.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment increased to 83.7, the highest since July 2007, from 76.4 in April, a report today showed. Separately, the Conference Board’s gauge of the economic outlook for the next three to six months climbed 0.6 percent in April, more than forecast.

Russia’s GDP increased 1.6% from a year ago, declining for the fifth quarter. The economy of the world’s largest energy exporter is grinding to a halt as the recession in the euro area, which accounts for about half of Russian trade, extended into a sixth quarter. The GDP slowdown prompted the Economy Ministry last month to cut its 2013 growth forecast to 2.4% from 3.7% and last year’s pace of 3.4%. Most all the main global economies are wakening, but as long as the Fed and other central banks continue to keep interest rates at these extreme lows stock markets will continue to improve. But look out when the time comes for the Fed to begin unwinding of its QEs; unless there is a raid change in the economic outlooks and data supports that view, the global equity markets are set up for a major reversal.

The Philadelphia Federal Reserve’s regional manufacturing gauge fell to -5.2 in May from 1.3 in April, far lower than expectations of 2.4. Readings below 0 suggest the manufacturing sector in the U.S. mid-Atlantic region is contracting.

Prices at the consumer level slid 0.4% in April from March, a steeper drop than the 0.2% economists expected, as energy prices plummeted. Excluding the food and energy components, prices rose 0.1%, slightly less than the 0.2% gain expected.

The Labor Department reports new claims for unemployment benefits increased to 360,000 last week from an upwardly-revised 328,000 the week prior. Claims were expected to rise to 330,000 from an initially-reported 323,000.

U.S. housing starts dropped 16.5% in April from March to an annualized 853,000-unit rate. Permits for the month increased 14.3% to an annualized rate of 1,017,000 units, the highest since June 2008.

In Europe Q1 GDP was weaker than expected, at -0.2% after a 0.6% decline in Q4 2012; estimates were for a decline of 0.1%. The German economy expanded 0.1 percent in the first quarter, while France contracted 0.2 percent and Italian output dropped 0.5 percent. Euro-area unemployment has reached a record 12.1 percent. The ECB forecasts that the euro economy will shrink 0.5 percent this year. That compares with the European Commission’s projection of a 0.4 percent contraction.

MBA reported last week’s applications. A big jump in rates pulled down mortgage activity sharply in the May 10 week. The purchase index moved down from multi-year highs, falling 4.0%, with the refinance index showing an even steeper decline, down 8.0%. The average rate for 30-year fixed mortgages with conforming balances ($417,500 or less) rose a very steep 12 basis points in the week to 3.67%. Application activity, including purchase activity which is still near multi-year highs, is volatile week to week, but this week's dip is severe and raises the risk that further increases in mortgage rates could hold down seasonal activity in the housing sector.

The Federal annual budget deficit is shrinking. According to the CBO the 2013 fiscal year that ends on Sept 30th is now projected at -$642B , down from its estimate of -$845B three months ago. After 4 yrs of annual deficits over $1 trillion the decline takes away much of the budget cut debates that has locked Congress up tight. Higher tax revenues and large dividend payments frm Fannie and Freddie are combining to bring the deficit down.