Daily Commentary: Trading
in the credit market is fairly thin this morning as market participants await
the 1:00 p.m. ET conclusion of today's Treasury Department auction of $32
billion of 3-year notes. The relatively
short duration of these notes should draw a solid bid from domestic and foreign
investors. This event will likely have
little impact on the current trend trajectory of mortgage interest rates.
Still to come this week -- The Treasury
Department will sell $21 billion of 10-year notes tomorrow and they will
wrap-up their three-part auction series with the sale of $13 billion of 30-year
bonds on Thursday. The three major
economic reports of the week, Wednesday's May Producer Price Index and May
Retail Sales figures together with Thursday's May Consumer Price Index, will
all be released at 8:30 a.m. ET. Each
of these reports is expected to be mortgage market neutral.
My timing algorithms continue to suggest
mortgage interest rates will probably begin a more sustained move to higher
levels sometime between June 21st and the end of July. For the time being investors will be
reluctant to begin aggressively reducing their safe-haven investments in dollar
denominated assets like U.S. Treasury debt obligations and agency eligible
mortgage-backed securities before results of the Greek elections on June 17th
are known and the Fed has concluded its Open Market Committee meeting on June
20th. Until then, expect
mortgage interest rates here at home to chop nervously back and worth in a
relatively tight range.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
