Daily Commentary by Larry Baer 6.10.2011

Commentary: Mortgage interest rates are moving sideways today – supported in large part by continuing weakness in the stock markets. Capital fleeing the equity market sell-off is finding its way into the safer-haven of Treasury obligations and mortgage-backed securities – a condition likely to support steady to perhaps fractionally lower mortgage interest rates into the weekend.

Mortgage investors remain focused on the interest rate friendly combination of a weak labor and housing market, a slowing manufacturing sector, and the seemingly perpetual European debt crisis.

The coming week brings the latest readings of inflation pressure from both the factory gate as well as from consumers’ front porch. The Labor Department is scheduled to release the May Producer Price Index figures at 8:30 a.m. ET on Tuesday, June 14^th followed by the May Consumer Price Index at 8:30 a.m. ET on Wednesday, June 15^th. The headline values for both reports are expected to show relief created by the recent markdowns of prices at the pump while the core rate of inflation (a value that excludes the more volatile food and energy prices) is expected to be well behaved across the board. If economists’ expectations prove accurate, look for mortgage interest rates to skate through both reports with little, if any threat of upward pressure.

THE MARKET IS ALWAYS RIGHT! … YOU AND I ARE SOME OF THE TIME