Daily Commentary by Larry Baer: The
selling pressure of the past two days is probably nothing more than a round of
profit-taking following the protracted rally that began in late March and has
now pushed mortgage interest rates to 60+ year lows.
My models are suggesting mortgage interest rates
will likely 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 abandon their safe-haven
investments in dollar denominated assets like U.S. Treasury debt obligations
and agency eligible mortgage-backed securities until the 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 very tight range.
The private Institute
of Supply Management
reported earlier this morning that its Service Sector Index (a measure that
covers about 90% of our domestic economic activity) rose to 53.7% in May from
the prior month's 53.5% mark. The
details of the survey were mixed with business activity and new orders gaining
while employment fell. All told, this
data suggests while the nonmanufacturing portion of our economy may no longer
be slowing - signs of a turnaround to more robust growth have yet to
surface. After an initial knee-jerk
reaction to this slightly better-than-expected news - mortgage investors gave
this report little more than a disinterested yawn.
Fed Chairman Bernanke's appearance on
Thursday morning before the Joint Economic Committee of Congress will easily
trump Thursday's jobless claims report for the week ending June 2nd
as the most dominate event remaining on this week's calendar.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
