Daily Commentary by Larry Baer: As expected, mortgage investors completely shrugged off this morning's release of the November Wholesale Inventory report. The data showed wholesalers kept enough goods on hand to last 1.15 months at the current sales pace, close to the record low of 1.13 months reached in March last month. A few economists are touting the low inventory level as a sign manufacturing activity will ramp-up substantially on the slightest improvement in demand. While technically this assessment is accurate - the majority of analysts see the low inventory level as a reflection of businesses assessment that economic growth - at least through the first half of the year - will likely remain anemic. The latter point-of-view is dominating the market place - supporting the prospects for steady to perhaps fractionally lower mortgage interest rates.
Uncle Sam is scheduled to sell $32 billion of 3-year notes at auction today. The sale will conclude at 1:00 p.m. ET and is broadly expected to be a "non-event" with respect to its influence on the current level of mortgage interest rates. I will post the auction results on my website as soon as possible once the final gavel falls.
Uncle Sam will conduct a 10-year note sale tomorrow and a 30-year bond sale on Thursday. Current forecasts suggest both offerings will probably draw strong enough demand to limit the upward pressure they might otherwise put on the trend trajectory of mortgage interest rates.
The December Retail Sales figures scheduled for release at 8:30 a.m. ET on Thursday will be the only notable macro-economic report on tap for this week. Mortgage investors have already priced-in expectations for a decent but not outstanding December for retailers. Given the actual numbers closely approximate the current consensus estimate from economists calling for a 0.2% headline gain for December retail sales - look for little if any directional influence to be exerted on mortgage rates as a result of this report.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
