Daily Commentary by Larry Baer: The economic calendar is vacant today. Mortgage investors will instead focus intently on the results of Italian and Spanish government debt sales this week. Both are seen as the year's first big funding tests for struggling euro zone countries. At least through Thursday this leaves the primary influence on the direction of mortgage interest rates tied uncomfortably to developments in Europe.
Once the "flight-to-quality" element related to the credit crisis on the other side of the Atlantic is taken out of the support mechanisms currently producing steady to fractionally lower mortgage interest rates here at home - the upward pressure on home financing costs will almost certainly begin to climb. That's the bad news. The good news component of this story is that the crisis in Europe does not appear likely to resolve itself quickly or neatly - a condition almost certain to tether mortgage interest rates here in the U.S. within shouting distance of current levels for the foreseeable future.
Looking ahead to the balance of the week Uncle Sam will be in the credit markets from Tuesday through Thursday looking to borrow $76 billion in the form of 3- and 10-year notes together with 30-year bonds. 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 the coming five-day business 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
