Market Update by Larry Baer:
The text and tone of the minutes from the Fed's March 13th meeting suggests the central bank is becoming less interested in launching another round of quantitative easing - which dims the prospects for more economic stimulus in the form of QE3 -- but also for any chance "Operation Twist" will be extended beyond its scheduled conclusion in June.
As mentioned in this morning's commentary -- mortgage investors have wasted no time nudging rates fractionally higher as Uncle Sam appears closer to ratcheting down his massive mortgage-backed security buying interest.
As I have written in the commentary since Monday, March 26th my timing models were indicating a trend change was likely between Monday, April 2nd through tomorrow April 4th. My timing models are now suggesting the next most likely time frame for an acceleration of trading activity or a trend change is Monday, April 9th and Tuesday, April 10th.
If Friday's headline nonfarm number falls below 190,000 -- and/or the jobless rate climbs to 8.4% or more -- the current selling pressure will likely surrender to renewed buying interest. At this juncture my pricing models are indicating the Fannie Mae 3.5% mortgage-backed securities will not likely trade lower than 102.031 before a bounce to higher prices can be reasonably expected.
