Foster Weeks publishes a weekly mortgage report which is updated every Monday morning. How is this affecting the San Francisco real estate market? Read our weekly and monthly market reports. Here’s what Mr. Weeks says about last week’s activity:

TO EVERYTHING (EARN, EARN, EARN)…THERE IS A SEASON (EARN, EARN, EARN)… That’s how Pete Seeger and The Byrd’s famous 1962 hit, “Turn, Turn, Turn” could be rewritten for the financial markets of late – earnings season kicked off last week, with several reports delivering music to the economy’s ears.

The week began with the sweet sounds of investment banking giant Goldman Sachs reporting earnings that were much better than expected. More good news from the financial zone followed, with better than expected earnings from JP Morgan Chase and Citigroup. As you can see in the chart below, the financial sector has clearly been helped by the recent mark-to-market discussions and easing of the FASB ruling. In other sectors, big players Google and General Electric also reported earnings that were higher than anticipated.

And more good news last week, as Fed Chairman Ben Bernanke sang out that there are signs that the sharp decline in the economy is slowing, indicating a potential “first step” towards a recovery from the worst recession in a generation. Specifically, he said, “I am fundamentally optimistic about our economy. Today’s economic conditions are difficult, but the foundations of our economy are strong, and we face no problems that cannot be overcome with insight, patience, and persistence.” While last week’s Retail Sales Report came in lower than expected, indicating that consumers are still keeping a good grip on their wallets – Bernanke’s words certainly inspire some economic confidence.

There was also some inflation news to note last week – important in particular as inflation is the arch-enemy of Bonds and home loan rates. While the Producer Price Index showed that inflation at the wholesale level is tame and the overall Consumer Price Index was lower than expected, the Core Consumer Price Index – which excludes volatile food and energy prices – came in slightly hotter than expected. Although inflation is not a present concern, traders are watching carefully for signs of it heating up, particularly as the year progresses and the impact of massive economic stimulus takes hold.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. And that’s what was seen at the end of last week, as Stocks were buoyed by the strong earnings reports, causing Bonds to fall below a key technical support level as money flowed out of Bonds and into Stocks. After bouncing around a bit throughout the week, Bonds and rates ended the week at similar levels to where they began.

Read the entire report here