Commentary: The central feature of the coming week will be a three-part Treasury debt auction scheduled to run from Monday through Wednesday. Uncle Sam will look to borrow a total of $66 billion in the form of 3- and 10-year notes and 30-year bonds. I'll provide auction results on my website once the final gavel falls at 1:00 p.m. ET on each of the three respective days.
The economic calendar will feature twin measures of inflation pressure in the form of Wednesday's August Producer Price Index and Thursday's August Consumer Price Index. Wednesday's August Retail Sales figures will also draw considerable investor attention. All three major economic reports are expected to be mortgage market neutral.
The Treasury auctions results together with trading action in the stock markets will probably exert the most influence on the trend trajectory of mortgage interest rates this week.
According to my models, the Dow Jones Industrial Average (a price-weighted average of 30 actively traded, primarily blue chip industrial stocks, considered to be an indicator of overall stock market conditions) is in the process of establishing a intermediate-term (multi-week) bottom somewhere in the neighborhood of 10,800 and 10,600. This bottom, according to my models, will likely be made this week. If this assessment proves anywhere close to accurate, it will be difficult, if not impossible for mortgage note rates to move significantly lower from current levels. Heads up.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
