Commentary: Trading activity in the mortgage market is once again light this morning - with the few investors still at their desks not inclined to be an aggressive market participant heading into the three-day Easter holiday.
This morning's release of the weekly initial jobless claims data and Leading Indicators for March came and went without a trace with respect to their influence on the trend trajectory of mortgage interest rates.
The Treasury Department sold a record $14 billion of 5-year Treasury Inflation Protected Securities at 11:30 a.m. ET this morning. Investors offered to buy 2.57 times the amount of debt sold, compared to an average of 2.48 times at the last four sales of 5-year TIPS. Indirect bidders, a group which includes foreign central banks, purchased 39.5% of the offering, compared to an average of 36.3% of recent sales. Direct bidders, which include domestic money managers, bought another 2.7%. This group of investor's average participation rate at the last four auctions was 2.2%. With the successful auction out of the way -- look for trading activity in the mortgage market to drift aimlessly into the early holiday close at 2:00 p.m. ET.
Enjoy your holiday break because next week will be a busy one in the mortgage market. March New Home Sales figures are due on Monday. On Tuesday the Federal Open Market Committee will huddle for a two-day monetary policy strategy session -- and Uncle Sam will be splashing around in the credit markets for three-days beginning on Tuesday looking to borrow $99 billion in the form of 2-, 5- and 7-year notes.
By far and away the most influential event of the coming week will be the release of the Fed's post-meeting statement expected at 2:15 p.m. ET on Wednesday. The investment community is expecting the Fed will refrain from making any significant change to their monetary policy which includes allowing the $600 billion QE2 fiscal stimulus program to run to its natural conclusion at the end of June. Any substantial deviation from these mundane expectations will almost certainly jolt mortgage interest rates out of their recent narrow trading range. At this juncture, it appears to me the path of least resistance for rates leads higher. Heads up.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
