Daily Commentary by Larry Baer: As I mentioned in this space yesterday -- from this point forward mortgage investors' attention will be split between the shifting tide of events surrounding the European debt crisis and the looming November 23rd deadline for the 12-member bipartisan congressional committee to either "put up or shut up" with respect to delivering on their objective of crafting a $1.2 to $1.5 trillion budget reduction package. If the committee fails in their assignment, or if their proposal fails to impress market participants, the probabilities are high stocks will take one "on-the-chin" which will in-turn directly benefit the prospects for steady to perhaps fractionally lower mortgage interest rates.
I'll keep you posted as these two stories continue to unfold.
Looking ahead to next week's holiday-shortened trading sessions -- the Treasury Department will conduct a $35 billion 2-year note auction on Monday, a $35 billion 5-year note auction on Tuesday followed by a $29 billion 5-year note auction on Wednesday. That is a lot of supply coming into the market at a time when many participants will have likely slipped away from their desks for an early start on the holiday. If my assessment proves accurate, poorly bid Treasury auctions will tend to put some upward pressure on mortgage interest rates.
Monday's Existing Home Sales data, Tuesday revised Q3 Gross Domestic Product figures and Wednesday October Personal Income and Spending numbers will almost surely be completely overshadowed by headlines from Europe, the deadline for results from the Congressional budget committee and supply issues related to the Treasury Department's $99 billion 3-part Treasury auction.
Cross-winds are blowing hard in the mortgage market these days - if you choose to take "floating" loan risk do so very carefully - just as if you were ice-fishing in the spring. Don't go very far from shore - don't drive your pick-up onto the ice - and if you hear a cracking noise -- don't ask questions just scramble for the safety of the bank.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
