Commentary: "Flight-to-quality"
buying continues to support the prospects for steady to perhaps fractionally
lower mortgage interest rates as the weekend approaches. A Spanish sovereign debt downgrade combined
with expectations that Chinese economic numbers could come in weak is
continuing to fuel the stampede of global capital into safe-haven assets like
dollar denominated U.S. Treasury debt obligations and agency eligible
mortgage-backed securities.
Looking ahead to next week -- Uncle Sam will
be in the credit markets with intentions of peddling $66 billion worth of 3-
and 10-year notes together with a stack of 30-year bonds to the global
investment community. The Treasury Department
will sell $32 billion of 3-year notes on Tuesday, $21 billion of 10-year notes
on Wednesday and they will wrap-up the auction process with the sale of $13
billion of 30-year bonds on Thursday.
The two major economic reports of the week, the May Producer Price Index
and the May Retail Sales figures, will be released at 8:30 a.m. ET. Both reports are 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
