Commentary: Uncle Sam will be in the credit markets this week looking to borrow $66 billion through a three-part auction series running from Tuesday through Thursday.
Wednesday's March Retail Sales, Thursday's March Producer Price Index and Friday's Consumer Price Index will all draw considerable investor attention as well. Investors have already priced in expectations that Retails Sales will post another solid month of gains while core inflation pressures at both the wholesale and consumer levels are forecast to have edged fractionally higher. The consensus estimate among economists is currently calling for a 0.3% gain in the month-over-month core producer price index and a 0.2% month-over-month gain in the core rate of the consumer price index. In my judgment these two core measures of inflation (a value excluding the more volatile food and energy components) is where the rubber-will-meet-the-road in terms of the trend trajectory of mortgage interest rates this week. Core inflation values less than the current consensus estimate will be supportive of steady to perhaps fractionally lower rates -- while higher core inflation readings - especially if it occurs at the consumer level - will unfortunately, but almost certainly send mortgage rates higher.
I continue to believe trading activity in the stock markets will be a major "X-factor" in terms of the trend trajectory of mortgage rates over the course of the coming week. Higher stock prices will tend to put upward pressure on mortgage interest rates while falling stock prices will probably prove supportive of steady to fractionally lower mortgage interest rates.
My models are suggesting the further we get into April - the more difficult it will likely be for the Dow and NASDAQ to sustain their move to higher prices. I am currently projecting the Dow will "top out" in the neighborhood of 12,550 on or about, Friday, April 15th. The NASDAQ seems to be setting up in a similar manner -- with a projected "top" in the neighborhood of 2,890 coming sometime between Wednesday, April 13th and Friday, April 15th.
Be patient - be disciplined - and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
