Commentary: The trend trajectory of mortgage interest rates this week will likely be most strongly influenced by news headlines regarding developments in the ongoing European debt crisis and its related impact on stock trading here in the United States.
If pending legislation among the members of the European Union to expand a stability fund for Greece and other financially struggling euro countries hits a snag - look for massive amounts of capital to flee that part of the world for the relative safe haven of dollar denominated assets like U.S. government debt obligations and mortgage-backed securities. Should this condition develop - it will almost certainly tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
There is a growing likelihood the Dow and the NASDAQ will each experience a corrective sell-off before the week is over - especially if it appears the European debt crisis is worsening. Should this event occur -- look for a short-term "flight-to-quality" buying spree in the mortgage market to develop as capital temporarily leaves riskier asset classes like stocks for the safety of fixed-income assets like mortgage-backed securities. This too is a condition, should it develop, likely to prove supportive of steady to perhaps fractionally lower mortgage interest rates.
Uncle Sam will be in the credit market today to peddle $32 billion of 3-year notes at an auction scheduled to conclude at 1:00 p.m. ET. This event is unlikely to exert much influence on the direction of mortgage interest rates one way or the other. I'll post the sale result on my website as soon as possible once the final gavel falls.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
