Commentary: Different day - same story.
Uncle Sam will be in the credit markets looking to sell $24 billion of ten-year notes today. The Fed has been the dominant buyer of Treasuries sold at recent auctions. Fed Chairman Bernanke has about $75 billion of his original $600 billion "QE2" stimulus allocation left in his checkbook - a sum he intends to spend before the program ends next month. Most observers expect the Fed will use whatever amount is required to "crease-the-wheels" at this week's government debt sale. If so, today's $24 billion 10-year note offering and tomorrow's $16 billion 30-year bond sale will likely have little, if any discernible impact on the trend trajectory of mortgage interest rates. These two government debt sales will conclude at 1:00 p.m. ET. I'll post the auction results on my website as soon as possible once the final gavel falls.
It is Wednesday -- which means the Mortgage Bankers of America are out with their latest mortgage application survey. According to the MBA, mortgage application activity picked up during the week ending May 6th. The number of applications taken for purchase money loans increased 6.7% from the prior week mark -- while refinance requests were up 9.0% for the period. The composite index rose 8.2% from the preceding week.
The MBA said the national average contract rate for 30-year fixed-rate mortgages finished the week at 4.67%, down by 9 basis-points from the prior week, down by 31 basis-points from four-weeks ago, and down by 29 basis-points from year ago levels. Refinance applications represented six out of every ten applications taken for the week.
Not much in the way of economic news is on the docket until tomorrow when investors will react to the inflation data contained in the April Producer Price Index and we will get a chance to see how big a hunk, if any, higher energy prices took out of the April Retail Sales numbers. The second part of the inflation story will be told on Friday with the release of the April Consumer Price Index. As long as the core rates (a value that excludes the more volatile food and energy price components) of both the Producer and Consumer Price Indexes remain at 0.2% or below these two data series will likely have little influence on the level of mortgage interest rates. In the off-chance one or both of the core indexes of these two primary measures of inflation post a reading of 0.3% or more -- look for mortgage rates to make a noticeable move to higher levels.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
