Commentary: The mortgage market is experiencing a modest rally in the day's early going as a renewed sense of anxiety about Europe's financial stability and a notable decline in China's trade surplus suggests the global economy is teetering on the edge of an extended recession. All the floor pacing and hand-wringing have once again made safe-haven investments like Treasury debt obligations and mortgage-backed securities attractive - at least for the day.
Mortgage investors were quick to shrug off a weekly jobless claims report that offered a faint positive sign of labor market stability. Realization that the pace of economic growth in the U.S. is far more vulnerable to global influences than many traders had previously assumed is beginning to dominate risk-management strategies. Whether it is the complexities of reaching unanimous agreement among the 17 euro-area governments regarding the resolution of the sovereign debt crisis on that side of the Atlantic, or the increasingly gridlocked political environment here at home - the investment landscape is covered with dark clouds and ever shifting winds. Against this backdrop most market participants will likely focus primarily on the return OF their principal - rather than the return ON their principal. As long as such a mindset prevails in the market place - mortgage interest rates will likely bounce back and forth in a relatively tight range of where they happen to be today.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
