Daily Commentary by Larry Baer: The mortgage market is experiencing a little sell-off this morning as the stock markets rally on this morning's news from the Commerce Department indicating retail sales grew at its fastest pace in five months in February.
Total retail sales increased 1.1% after a 0.6% gain in January. The increase was broadly in-line with expectations. Excluding autos, retail sales advanced 0.9%, adding to January's revised 1.1% improvement. Warmer than normal weather across a broad area of the country together with higher energy prices may have skewed the data to the high side this time around. If so, the payback will appear in the March and April figures - numbers that investors will be watching closely for signs suggesting the economy is growing at a more robust pace than most economists currently anticipate.
The members of the Federal Open Market Committee have convened a 1-day meeting to discuss what, if any, adjustments should be made to existing monetary policy. Fed officials are expected to acknowledge signs of improvement in the labor market but will not likely make any other adjustment to the level of short-term interest rates or make any announcement related to new fiscal stimulus plans. This FOMC meeting is not expected to influence the current trend trajectory of mortgage interest rates one way or the other. Today's meeting will close without a news conference by Chairman Bernanke or the release of new economic forecasts by the members of the committee. The post-meeting statement will be released to the press as usual at 2:15 p.m. ET.
Uncle Sam is looking to sell $21 billion of 10-year notes at auction today. The auction will conclude a 1:00 p.m. ET. The yield on this debt offering has climbed to levels that should prove attractive to both foreign and domestic investors alike. Decent demand at today's sale will tend to be supportive of at least steady mortgage interest rates. In the unlikely event the Treasury Department finds it necessary to "sweeten-the-pot" by pushing the yield of these 10-year notes above the 2.10% mark (currently 2.080%) - expect mortgage investors to respond by pushing note rates higher as well.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
