Daily Commentary by Larry Baer: As the first trading day of 2012 gets under way activity in the mortgage market is thin and sporadic. Mortgage investors are trying to balance tentative signs of improvement in the U.S. economy with the cloud of uncertainty hanging over the euro zone crisis and rising tensions in the Middle East.
The private Institute of Supply Management released their December Manufacturing Index earlier this morning. The overall index rose to a reading of 53.9% from the prior month's 52.7%. The employment component of this index moved notably higher from November's 51.8% to 55.1% in December. I suspect a number of mortgage investors chose to revise upward their projections for Friday's much anticipated December Nonfarm Payroll figure after seeing the big jump in manufacturing employment reflected in this report. It appears many of these same investors chose to nudge mortgage interest rates fractionally higher as well.
Mortgage interest rates may get bounced around a little as mortgage investors begin the New Year -- but I think this early volatility will settle out quickly as it becomes increasingly evident Europe's debt crisis is going to weigh heavily on business growth here at home. A slowdown in economic growth reduces the demand for capital -- which in-turn generally results in steady to fractionally lower interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
