Commentary: Mortgage investors are doing nothing more than milling around with their hands in their pockets waiting for the final gavel to fall at this afternoon's 1:00 p.m. ET sale of $35 billion of 2-year notes. Early indications suggest the auction will draw solid demand from foreign and domestic investors alike. If this assessment proves accurate, mortgage interest rates will not likely move much in either direction. Only in the off-chance demand is so weak at today's debt sale Uncle Sam finds it necessary to "sweeten-the-pot" by offering a notably higher yield on today's offering of 2-year notes will mortgage investors feel particularly compelled to push rates upward from current levels. I'll post today's auction result on my website as soon as possible once the final gavel falls.
The Commerce Department reported earlier this morning July new home sales fell a more-than-expected 0.7% -- hitting a five-month low. The June New Home Sales pace was revised fractionally lower as well. There were a record-low 165,000 new homes on the market in July. This news came as no surprise to mortgage investors who are keenly aware the pace of new home sales will not improve meaningfully until job creation ramps up on a multi-month sustainable basis.
The biggest event on this week's schedule is, in my opinion, Fed Chairman Ben Bernanke's Friday morning address to attendees at the Fed's global banking conference in Jackson Hole, Wyoming. Bernanke is expected to acknowledge his disappointment over the pace of economic growth -- but the probabilities remain low he'll provide any guidance on a new round of monetary stimulus. If my assessment proves accurate, it's a perfect recipe for a churning, range-bound trading environment for both stocks and bonds. Heads up.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
