Daily Commentary by Larry Baer 10.20.2011
Commentary: Different day - same story. The trend trajectory of mortgage interest rates continues to be far more influenced by investors' perception of the degree of progress, or lack thereof, European leaders are making on euro zone debt and banking issues.
The latest chapter in this ongoing saga suggests the expected European Union summit planned for this weekend may be postponed. Failure to reach a deal to insure the next sovereign debt default averting payment to Greece (due by the end of the month) will further undermine market confidence in the currency bloc and its collective ability to solve a two-year-long debt crisis. Should such an event occur - look for mortgage interest rates to move sideways to fractionally lower from current levels as capital flows out of Europe and into the relatively safe-haven of dollar denominated assets like Treasury debt obligations and mortgage-backed securities.
Here at home the Labor Department reported this morning that new claims for government unemployment benefits declined by 6,000 to 403,000 during the week ended October 15th. After spiking in mid-September, weekly jobless claims appear to have settled near the 400,000 level normally associated with some improvement in the jobs market. Most mortgage investors have used the trend in the weekly jobless claims figures as the basis for their forecast calling for a 103,000 job gain in the far more important October nonfarm payroll report to be released on November 4th. An actual nonfarm payroll number than matches or falls below this projection will tend to support steady to perhaps fractionally lower mortgage interest rates.
In a separate report, the National Association of Realtors announced this morning that the pace of existing home sales in September fell by 3.0% on a month-over-month basis. The news was in line with general credit market expectations and did not create even the slightest ripple of response from mortgage investors.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
