Daily Commentary by Larry Baer: Mortgage investors have moved to the sidelines to await the results of this afternoon's $13 billion 30-year Treasury bond sale. After yesterday's less than stellar 10-year note auction there is concern Uncle Sam will have to "sweeten-the-pot" by nudging up the yield (interest rate) he's willing to pay in order to attract the targeted capital. If so, mortgage interest rates will likely creep higher as well. Until the final gavel falls at 1:00 p.m. ET most mortgage investors will be content to stand on the sidelines with their hands in their pockets rather than fretting about the auction results. I will post the auction result on my website as soon as possible once bidding concludes.
New claims for government unemployment benefits rose last week to their highest level since January. The number of Americans filing first-time claims for jobless benefits increased 13,000. The previous week's figure was revised upward by 10,000 claims. Much of the recent increase may be related to spring break, when many school bus drivers and cafeteria workers around the country are allowed to file claims in their states. Mortgage investors essentially shrugged off today's surprisingly soft news from the labor sector - unsure whether today's blip is nothing more than a seasonal anomaly -- or the start of a new trend. You can bet mortgage investors will be more sensitive to forthcoming weekly jobless claims reports.
Today's other economic report showed inflation at the gates of the nation's farms and factories remained benign in March. Producer prices were unchanged after advancing 0.4% in February. Wholesale prices excluding food and energy costs rose 0.3% last month after February's 0.2% gain. That was a touch above economists' expectations calling for a 0.2% advance and marked the fifth consecutive month of increases in the so called "core" Producer Price Index. So far manufacturers and producers have found they have limited ability to pass these increased costs on to consumers.
Mortgage investors will be keenly interested to see whether that dynamic has begun to shift. If so, an increase of 0.4% or more in tomorrow morning's 8:30 a.m. ET release of the March Consumer Price Index and/or an increase in the "core" rate of more than 0.2% will likely exert some additional upward pressure on mortgage interest rates.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
