Daily Commentary by Larry Baer: As expected, mortgage investors gave this morning's February Wholesale Inventory report nothing but a passing glance. Trading action in the stock markets will likely be the strongest determinant of the trend trajectory of mortgage interest rates today. Lower stock prices will be supportive of steady to fractionally lower rates while stronger stock prices will tend to push mortgage interest rates higher as well.
Uncle Sam will be in the credit markets through the first-half of the day looking to sell $32 billion worth of 3-year notes. The relative short duration of these notes should draw a reasonably strong bid from domestic as well as foreign investors. If so, this event will likely prove to be supportive of steady to fractionally lower mortgage interest rates. I'll post today's auction result on my website as soon as possible once the final gavel falls.
Looking ahead to the balance of the week -- Uncle Sam will be back in the credit markets tomorrow and Thursday looking to borrow $34 billion in the form of 10-year notes and 30-year bonds. Weakness in last Friday's employment data together with the likelihood growth in China and Europe is slowing will probably combine to provide solid demand from foreign investors for these offerings.
The inflation story here at home will be told through the release of the March Producer Price Index on Thursday followed by the March Consumer Price Index on Friday. Overall inflation is expected to remain benign but continuing high energy prices may soon cause a shift in this outlook. Assuming both inflation reports match current expectations the data is unlikely to exert a significant influence on the current trend trajectory of mortgage interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
