Mortgage bonds are still trading near their worst levels of the year at the end of what has been a very volatile trading week.

Financial markets this week have been pre-occupied with fears of potentially rising inflation, increasing bond supply due to massive government deficits, and decreasing bond demand from the Fed and other Central Banks.

Rising interest rates in the global bond market are also continuing to pressure US mortgage rates higher. The Fed is scheduled to purchase up to $840 million of GNMA mortgage bonds today, and they'll be back in the market on Monday with a sizable purchase of 30-year conventional mortgage bonds.

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