The economists spent the weekend dissecting the job's number, and the other economic releases, from last week: that's what economists do. In December the US lost 85,000 jobs, but November showed a gain for the first time in two years. Still, the markets believe that the Fed will keep overnight rates close to 0% for quite some time - we're not out of the woods yet. November Pending Home Sales fell 16% from October, but the decline followed nine straight months of increases and November Pending Home Sales were 15% higher than one year ago.

So what are bright minds saying about the economy? Well, private payrolls are still contracting, the Fed has not changed its stance too much in several months, manufacturing is picking up a little as opposed to construction spending which is not, and auto sales are picking up a little, as is service sector activity. Most believe that rates will move up, but not much, in the first part of 2010 - maybe with the 10-yr going above 4.00%. This will push the dollar higher somewhat, but will also bring investors in to the fixed income market, helping mortgage rates.

This week the economic calendar is pretty light until later in the week, and currently the 10-yr is at 3.82% and mortgage prices are close to  unchanged. Until then we have tomorrow's Trade Balance figures (usually not a big deal for interest rates) and the Fed's Beige Book on Wednesday. Thursday we have Jobless Claims, Import Prices, and Retail Sales. On Friday we have the Consumer Price Index (CPI), Industrial Production, Capacity Utilization, Consumer Sentiment, and the Empire State Index. Throw in $84 billion of Treasury auctions Tuesday through Thursday and we could see some volatility ($40 billion of 3-yr tomorrow, $21 billion in 10-year notes and $13 billion in 30-year bonds, as well as $10 billion in 10-year Treasury inflation-protected securities). On the plus side, besides the fact that the volatility could work to lower rates, is that with the Treasury supply and the supply of mortgages sliding lower (but still about $2 billion a day), mortgage prices could do well on a relative basis