Daily Commentary by Larry Baer: The private Institute of Supply Management reported this morning that their Service Sector Index came in slightly weaker- than-expected. The Service Sector Index fell to 56.0% last month from 57.3% in February. Still, any reading over 50% indicates more firms say business conditions are expanding rather than contracting. The ISM index has now been above the 50% mark for 27 consecutive months.
In my judgment, the near-term trend trajectory of mortgage interest rates will be determined by Friday's nonfarm payroll figures. Here's how things breakdown.
A March headline nonfarm payroll number of 190,000 or less and/or a national jobless rate of 8.4% or higher will likely create a sell-off in the stock market that will prove supportive of steady to fractionally lower mortgage interest rates.
Should the March nonfarm payroll number exceed 200,000 and/or the jobless rate post a reading of 8.3% or lower - the probabilities will favor additional improvement in the stock markets at the expense of yet higher mortgage interest rates.
In my judgment, today's close will be very telling with respect to how mortgage investors are weighing the potential for a mortgage interest rate friendly number on Friday. If we hold on to most of this morning's gains the majority of mortgage investors are likely leaning in favor of a softer-than-expected March nonfarm payroll number. If most of today's early gains fade by the close - the majority of investors will probably begin bracing for nonfarm payroll numbers that match or exceed the consensus estimate - a mortgage interest rate unfriendly event.
As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application survey figures for the week ended March 30th. The composite index, a value that includes both purchase and refinance applications, rose 4.8%. Purchase applications were up 7.2% on a week-over-week basis while refinance application demand improved by 4.0%.
The contract rate for 30-year fixed-rate conforming mortgages finished the week at 4.16%, down 7 basis-points from a week ago, up 10 basis-points from four weeks ago, but down 84 basis-points from year ago levels.
THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
