Daily Commentary by Larry Baer: Trading activity continues to dwindle as mortgage market participants make their final preparations for the upcoming three-day Christmas Holiday.
Today's economic news was neutral to slightly mortgage interest rate friendly. The downward revision to the government's final estimate of third-quarter economic activity from the prior reading of 2.0% to 1.8% encouraged a few mortgage investors to nudge mortgage interest rates lower. The slight improvement in note rates will probably be short-lived as calmer, cooler heads use the rally in the mortgage market as a selling opportunity.
The consensus estimate among economist calls for economic growth to sputter along near the 2.0% level in 2012 before blossoming into a very strong expansion in 2013, 2014 and 2015 with annual growth of about 3.5% to 4.0%. If that assessment proves accurate, 30-year conforming mortgage interest rates should be expected to drift under the 5.0% level for most of the coming year.
The Labor Department reported this morning the number of Americans standing in line to file first time claims for government jobless benefits fell by 4,000. The usefulness of this data in measuring labor market conditions will be significantly diminished through the remainder of the year because of holiday volatility. Even so, while job growth is still too weak to power a self-sustaining expansion -- it is expected to pick up in the months ahead. Businesses have the cash to hire; they just need the confidence to do so. While rising employment should prove to have a positive impact on the prospects of improving mortgage demand - it will probably come at the cost of slightly higher note rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
