Daily Commentary by Larry Baer: It is s-l-o-o-w going in the mortgage market this morning. Trading volume is very light and activity is sporadic.
Treasury debt obligations and agency eligible mortgage-backed securities continue to benefit from the effects of "flight-to-quality" flows of capital out of euro-zone countries into the relative safe-haven of dollar-denominated assets. The European debt crisis is far from over and it has the potential to spiral into an even bigger mess over the first half of the new-year. As long as the condition exists -- the prospects for steady to perhaps fractionally lower mortgage interest rates ahead will remain fairly solid. That is not to say mortgage rates won't bounce around some - just the range of the bounce as measured from low to high won't likely amount to much (I'm thinking in terms of 12.5 to 25.0 basis points or so in note rate).
The Labor Department released a report earlier this morning showing new claims for government unemployment benefits rose a stronger-than-expected 15,000 during the week ended December 24th. Mortgage investors largely shrugged off this data reasoning that the jump in jobless claims last week probably says more about the statistical volatility related to the data during this time of year rather than anything really substantive about the current condition of the job market.
For the balance of this holiday shortened week the trend trajectory of mortgage interest rates will likely be most strongly influenced by trading action in the stock market. Higher stock prices will tend to drag mortgage interest rates higher while falling stock prices will probably prove supportive of steady to perhaps fractionally lower mortgage interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
