Commentary: The economic calendar is virtually barren of anything in the way of macro-economic news for mortgage investors to chew on this week. Tuesday's Institute of Supply Management's Service Sector Index will get some attention as will Thursday's initial weekly jobless claims number - but there is little chance either report will pack enough "punch" to significantly influence the trend trajectory of mortgage interest rates.
In my judgment trading activity in the stock markets will be the controlling factor with respect to changes in your investors' rate sheets. I see reasons to believe the Dow will be vulnerable to a downward correction as it trades into the 12,400 to 12,600 range (as I write the Dow is trading at 12,398). My timing models are suggesting a potential trend change for this asset class will likely occur on or about Tuesday, April 5th. (It is rare that my timing models produce trend change target dates for both mortgage-backed securities and stocks that match to the day - but it does happen.)
If my projections prove accurate, and if the sell-off in the Dow is stronger than 100 points or so - a large portion of the capital leaving the stock markets will almost certainly be happy to park in the relative safe haven of Treasury debt obligations and mortgage-backed securities - a development that will tend be to supportive of the prospects of steady to fractionally lower mortgage interest rates. On the other hand, if the Dow accelerates toward the upside target of 12,600 it will almost certainly do so at the expense of fractionally higher mortgage interest rates.
By the time the final bell sounds to end the trading day tomorrow -- it is highly likely we will have a solid idea which direction mortgage interest rates will trend for the balance of week. Be patient - be disciplined - and play it by the numbers.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
