In advance of the Federal Reserve’s comments at 2:00PM, the major equity indices have been see-sawing back and forth across the breakeven line. The initial drop came after the Department of Justice gave a ruling on several large banks which are now set to pay billions of dollars in collective penalties for manipulating foreign-exchange rates. Among these institutions are Citigroup (C), JPMorgan Chase (JPM), Barclays (BCS) and the Royal Bank of Scotland (RBS). However, the markets were lifted once again after the Energy Information Administration (EIA) provided its weekly reading on petroleum inventories. Apparently, the worst of the oil glut may be behind us based on the third consecutive week of declining inventories. Crude oil inventories declined by 2.7 million barrels for the week ended May 15^th to a total of 482.2 million. Although still operating at a very active 92.4% of capacity, refineries actually cut back output for the week.

Domestic data was light this morning, but the weekly reading on home mortgages gave a message which conflicts with yesterday’s strong housing data. The Mortgage Bankers Association (MBA) showed that all applications for US home mortgages fell in the week of May 15^th as mortgage rates rose to the highest level since December 2014. The MBA seasonally adjusted index of mortgage applications activity fell 1.5% in the week, while refinancing applications rose 0.3% and new home loan requests declined 3.7% to the lowest level since April.  Ultimately, 52% of all applications were in the form of refinancing, which rose from 51% of all applications in the prior week. The fixed 30-year mortgage rates averaged 4.04% for the week, up a sizable 4 basis points from 4.00% the previous week. Tomorrow, we will receive the next housing reading on existing home sales, which have been notable strong as of late.