Daily Commentary by Larry Baer: The release of the February Institute of Supply Management Service Sector Index and January Factory Orders early this morning drew nothing but a passing glance from mortgage investors as they busy themselves putting the finishing touches on their risk management strategies in front of Friday's much anticipated February nonfarm payroll report.
As I mentioned in this week's edition of "ViewPoint" -- a weaker-than-expected February payroll report will likely lead a majority of market participants to believe growth will slow dramatically across the globe as consumer spending softens in the face of a lethargic labor market and rising energy prices - a condition that will almost certainly cause stock prices to begin to fall at an accelerating pace. In "leg-bone-to-shin-bone" fashion selling pressure in the stock markets will almost certainly create a "flight-to-quality" migration of capital away from these riskier assets classes and into the relative safe-haven of Treasury debt obligations and mortgage-backed securities - a process that should provide the necessary support to enable mortgage interest rates to hover very near current levels.
. Most economists anticipate February nonfarm payrolls grew by 210,000 while the national jobless rate held steady at 8.3%. If the actual nonfarm payroll number matches or exceeds this projection -- look for mortgage interest rates to edge higher as stock prices climb. On the other hand, if the actual February headline payroll number posts a reading of 180,000 or less and/or the national jobless rate rises to 8.4% or more -- look for stock prices to fall sharply -- a condition virtually certain to prove supportive of steady to perhaps fractionally lower mortgage interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
