Market Commentary: The risks in Europe are
enormous and the global “flight-to-quality”
movement of capital fleeing that part of the world
continues to strongly support demand for U.S.
dollar denominated assets like Treasury debt
obligations and agency eligible mortgage-backed
securities.
Decelerating economic growth and non-existent
inflationary threats here at home leaves the door
wide open for the Fed to roll out another fiscal
stimulus program in the form of “QE3” before the
year is out.
As long as these two market conditions exist – the
vast majority of investors will be hesitant to sell the
debt obligations they currently hold in their
portfolios -- which in-turn provides solid support for
the prospects of steady to perhaps fractionally
lower mortgage interest rates in the days ahead.
