Daily Commentary by Larry Baer: The collective impact of this morning's barrage of macro-economic reports left the few investors' still at their desks with a sense that it is likely far better to be OUT of the market now and perhaps wind-up wishing you were IN - as opposed to being IN the market and wind up wishing to heck you were OUT. Thin trading volumes ahead of a significant holiday contributed to the slightly interest rate unfriendly tone in the mortgage market.
News that initial jobless claims for the week ended November 19th rose by 2,000 was completely shrugged off by market participants.
In a separate report the government said personal income rose 0.4% and spending posted additional gains of a weaker-than-expected 0.1% in October. Inflation, as measured by the core personal consumption expenditure index, was up a very tame 0.1%.
The Commerce Department joined the chorus of economic data with the release of their October Durable Goods Orders figures. Durables orders, (goods manufactured to last three-years or more) fell 0.7% in October, pulled down by a drop in civilian aircraft orders. Otherwise, durables orders were up a moderately positive 0.7%.
I suspect many readers are stifling a yawn right about now - and that's exactly the same reaction most mortgage investors had for this morning's deluge of economic mumbo-jumbo.
The Treasury Department will conduct a $29 billion 7-year note auction today which will conclude their three-part, $99 billion dollar borrowing spree this week. Yesterday's disastrous German bond sale will likely sustain enough of a "flight-to-quality" flow of capital out of Europe into the relative safety of dollar denominated assets to support decent, but not necessarily spectacular demand for today's Treasury debt auction. At best, I think this event will prove supportive of steady mortgage interest rates.
As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application Survey figures for the week ended November 18th. Overall loan demand declined 1.2% from the previous week -- led by a fall in refinance requests. The refinance component of the index dropped by 4.0% while the number of loans applications taken for the purchase of a home were up by 8.2%.
The contract rate for 30-year fixed rate conforming mortgages finished the week at 4.23%, unchanged from the week ago level, and down by 10 basis-points from four weeks ago.
Be patient . be disciplined . and consider using the numbers provided above as a blueprint for your risk management strategies this week.
