New home sales hit the largest increase in 47 years.

Mortgage bonds prices remain negative this morning piling on top of the already bad day of trading yesterday.

Durable goods orders fell 1.3%, weaker than the expected 0.3% increase. Unfortunately the data is being overshadowed by talk of the Fed selling assets off their balance sheet. More supply pressures prices down and rates higher.

Yesterday Treasury secretary Geithner made remarks about Fannie Mae and Freddie Mac that have the market unsettled. Geithner said they were a “colossal mess, colossal mistake, never should have happened.” He said the administration plans to “change that system completely” next year. Those remarks don't really instill much confidence in mortgage backed securities.

New home sales rose a shocking 26.9%. This was the largest increase in 47 years and just added fuel to the fire of an already negative mortgage bond market.