Market Commentary: The upcoming holiday shortened weak will be governed by continuing concerns over a possible Greek exit from the euro. Investors are not really so anxious about the impact a single country exit will have – they are biting their nails worrying but the “black swan effect” (unexpected consequences) such an event could have on the global economy.
Nervousness about Greek’s upcoming elections on June 17th and deepening stress levels in the banking sectors of Europe are keeping the fires of demand for safe-haven assets like Treasury debt obligations and mortgage-backed securities burning brightly. As long as this phenomenon dominates the credit markets -- a key pillar holding mortgage interest rates at, or near historical lows will remain firmly in place.
The entire battery of late-week macro-economic data will draw significant focus from mortgage investors -- but the most intense spotlight will be reserved for Friday’s employment data for May.
While the vast majority of market participants are expecting the Labor Department to report 150,000 or more new jobs were created in May -- a softer-than-expected nonfarm payroll number (130,000 new jobs or less) will likely make the knees of investors the world over start to knock. A second weak payroll number in a row combined with expanding downside risks in Europe has the potential to send global stock prices notably lower – an event should it occur – sure to directly benefit the prospects for steady to lower mortgage interest rates here in the states.
