Commentary: The mortgage market is treading water this morning - balanced between a larger than expected decline in the initial weekly jobless claims number that was mortgage market unfriendly -- and a mortgage market friendly softer-than-expected April Existing Home Sales number. In a nutshell, the recent macro-economic data is suggesting the pace of growth through the summer months may be exceptionally choppy. When uncertainty prevails, mortgage investors tend to take a "safe rather than sorry" approach to their rate sheet pricing strategies - a tactic that seldom proves supportive of the prospects for notably lower mortgage interest rates.
Uncle Sam will be in the credit markets this afternoon looking to borrow $11 billion in the form of a 10-year inflation-index security. Lower energy costs of late and slowing economic growth has reduced anxiety over inflation -- which likely means demand for this debt issue will be weak. If my assessment proves accurate, look for the mortgage market to succumb to selling pressure as the afternoon progresses.
There is nothing of consequence on the economic calendar for the balance of the week. In this environment a large number of mortgage investors will likely choose to take directional cues for note rates from trading activity in the stock market. Higher stock prices will tend to drive mortgage interest rates higher -- while falling stock prices will probably prove supportive of steady to perhaps fractionally lower rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
