Daily Commentary by Larry Baer: Revised third-quarter Gross Domestic Product figures released earlier this morning showed the economy growing a little slower than most market participants had anticipated. While the revision fell below expectations, the composition of the GDP report, especially the components showing still-firm consumer spending, the first drop in business inventories since the fourth quarter of 2009, and very benign inflation pressures at the consumer level all suggest the economic performance this quarter will be solid. This outlook has been priced into the mortgage market for sometime so today's news did not exert any discernable influence on the trend trajectory of mortgage interest rates.
The Treasury Department will conduct a $35 billion 5-year note auction today followed by a $29 billion 7-year note auction tomorrow. 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 either of the two remaining scheduled Treasury auctions are poorly bid it will tend to put upward pressure on mortgage interest rates.
Be patient . be disciplined . and consider using the numbers provided above as a blueprint for your risk management strategies this week.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
