Commentary: Mortgage investors have moved to the sidelines as they await the results of today's $21 billion 10-year Treasury note auction. I'll post auction results on my website as soon as possible once the final gavel falls at 1:00 p.m. ET.
I'm hearing chatter suggesting there will be some pretty solid bidding at today's auction by major broker/dealers who will be looking to cover a large part of their rather sizable short-positions. (A short position is created when a trader sells an asset he/she does not currently own in hopes the asset can be purchased at a later time at a lower price - allowing the trader to pocket the difference as profit.) If these whispers prove valid, today's 10-year note auction will likely be well bid and should create little, if any noticeable impact on the current trend of mortgage interest rates.
The Commerce Department reported earlier this morning that Retail Sales posted its ninth consecutive monthly gain in March. The March sales gain was the smallest since the string began last summer. Purchases last month were up 0.4% following a 1.1% revised gain in February. However, if gasoline sales are stripped out of the headline number - retail sales were up a very modest 0.1%. Mortgage investors were quick to discount the hearty round of applause coming from media "talking heads". Retail sales are directly dependent on job creation and wage growth -- and until evidence of sustained improvement in both of these two measures is available - month-over-month improvements for the pace of forward looking Retail Sales will remain questionable.
As they do every Wednesday, the Mortgage Bankers of America released their mortgage application statistics for the week ended April 8th. Overall mortgage loan demand declined by 6.7% from the prior week. Purchase loan requests declined 4.7% while refinance loan application activity dropped by 7.7%. Refinance applications accounted for six-out-of-every-ten loan requests submitted last week.
The MBA said the average national contract rate for a 30-year fixed-rate mortgage finished the week at 4.98%, up 5 basis-points from the prior week, up 19 basis-points from the month-ago mark, and down by 19 basis-points from the year ago level.
Be patient - be disciplined - and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
