Commentary: Mortgage investors have moved to the sidelines as they await the results of today's $13 billion 30-year Treasury bond auction. I'll post auction results on my website as soon as possible once the final gavel falls at 1:00 p.m. ET. Pre-auction trading activity related to this security is not suggesting this auction will be particularly mortgage market friendly.
The Labor Department reported earlier this morning that new claims for unemployment benefits rose 27,000 last week, bouncing back above the key 400,000 level. One week does not make a trend, and most investors continue to believe the economy is on track to create at least 200,000 net new jobs per month through the balance of the year.
The Labor Department also reported this morning that its seasonally adjusted index of prices paid at the farm and factory gate - the March Producer Price Index - rose slightly faster than most economists had anticipated. The core rate of inflation at the wholesale level (a measure stripped of the more volatile food and energy components) rose 0.3% last month after gaining 0.2% in February. In the twelve month period from March 2010 to March 2011, the core producer price index has climbed 1.9%, it biggest increase since August 2009. The upward momentum of inflation at the wholesale level is a concern for some - but in the face of weak labor market and wage growth, producers continue to find it difficult to pass on higher cost to consumers. Even so, inflation chatter is beginning to increase in private and public economic discussions - and as long as that background noise persist - it will be difficult for mortgage interest rates to move notably lower from current levels.
Be patient - be disciplined - and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
