Daily Commentary by Larry Baer: Concerns
are mounting that Europe's debt crisis is worsening while U.S.
economic growth is rapidly approaching stall speed. These two issues have combined to fuel
another solid round of "flight-to-quality" buying of Treasury debt
obligations and agency-eligible mortgage-backed securities this morning. All of this hand-wringing in the credit
markets creates the perfect foundational support for the near-term prospects
for steady to perhaps fractionally lower mortgage interest rates from your investors.
Looking ahead to the balance of the week --
Uncle Sam will be in the credit markets from Tuesday through Thursday
conducting a three-part, $99 billion, debt auction. First on the auction block tomorrow will be
$35 billion of 2-year notes, followed by $35 billion of 5-year notes on
Wednesday. The auction series will
conclude on Thursday with the sale of $29 billion of 7-year notes. All three offerings are expected to be well
bid. If so, the coming auctions will
probably exert little, if any noticeable influence on the current trend
trajectory of mortgage interest rates.
In terms of economic news Wednesday's release
of the June New Home Sales figures, Thursday's initial weekly jobless claims
report and Friday's first estimate of the second-quarter economic growth rate
will be the featured numbers of the week.
All three reports are broadly expected to be weak - a condition that is
already priced into most of your mortgage investors' rate sheets.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
