Daily Commentary by Larry Baer: Growth in the U.S. manufacturing sector expanded at a modestly faster pace in March according to data released earlier this morning by the private Institute of Supply Management. The ISM manufacturing index rose to 53.4% last month from 52.4% in February. The majority of mortgage investors discounted this otherwise mortgage interest rate unfriendly news - reasoning the current index reading is still consistent with an economy that is growing below its potential.
Trading in the mortgage market this morning is also being supported by new quarter buying. The Fed remains a steady buyer at around $1.4 billion per day on average -- which is contributing significantly to the relatively narrow trading range mortgage interest have been bouncing around in.
Mortgage investors will pay particular attention to the Tuesday afternoon release of the minutes from the Federal Open Market Committee's March 13th meeting. If the minutes indicate the Fed expects to conclude "Operation Twist" as planned in June - longer-term interest rates - including those for mortgages - will likely begin to rise. Analysts and other observers are almost evenly split on which way the Fed will move with respect to this program. March nonfarm payroll numbers on Friday will be a major deciding factor - with softer-than-expected employment figures supporting continued government support for lower interest rates while stronger-than-expected numbers will tilt the pendulum in favor of fractionally higher rates.
FYI: The mortgage market is usually closed on Good Friday - but to accommodate Friday's nonfarm payroll - the mortgage market will open at its normal time with an early close scheduled for 12:00 noon ET.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
