Commentary: Uncle Sam will be in the credit market today looking to sell $29 billion of 7-year Treasury notes. The auction will conclude at 1:00 p.m. ET and I'll provide results on my website as soon as possible following the conclusion of this event.
If the bidding at this afternoon's auction is aggressive by both domestic and foreign investors - look for mortgage interest rates to move sideways to fractionally lower as the afternoon progresses. Lackluster bidding at today's Treasury event will almost certainly cause mortgage rates to edge higher into the close of trading today. Judging by current trading activity for the 7-year Treasury note - the probabilities do not favor a strong, mortgage market friendly result at today's auction.
In other news of the day the Labor Department reported the number of Americans filling for first-time claims for unemployment benefits fell more than expected, indicating slow improvement in the labor sector. Claims fell by 22,000 last week to 391,000 - pushing the monthly average to the lowest level since July 2008. Over the past three months the economy has averaged net job gains of 83,000 -- certainly a step in the right direction -- but still off the estimated 125,000 pace necessary simply to keep up with the natural growth rate of the labor force. Even so, I'm seeing early estimates for next week Friday's much more important February nonfarm payroll report suggesting the economy created 175,000 net new jobs while the jobless rate ticked fractionally higher to 9.1% from January's 9.0% mark. If this forecast proves anywhere close to accurate - expect mortgage investors to feel compelled to push mortgage interest rates fractionally higher.
The Commerce Department said orders for durable goods rebounded a sharp 2.7% in January - but the outsized gain was largely the result of stronger demand for aircraft. Excluding the big jump in the transportation sector, orders were actually down 3.6% last month, the weakest showing since January 2009.
In a separate report the Commerce Department said New Home Sales for January slumped 12.6% -- a fact that came as no big surprise to mortgage investors since most were keenly aware the December number was "jacked-up" by homebuyers in California rushing to take advantage of a tax break that expired at the end of 2010.
All of today's macro-economic mumbo-jumbo was shrugged off by mortgage investors with flight-to-quality buying driven by Middle East headlines continue to be the only thing supporting mortgage interest rates at current levels.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
