Daily Commentary by Larry Baer: Trading
activity in the mortgage market is light and sporadic this morning as investors
wait to see whether Fed Chairman Bernanke and his fellow central bankers are
poised to inject the economy with an additional $500 billion dose of fiscal
stimulus in the form of "QE3."
The coming week's three-part $99 billion
Treasury auction, revised "guesstimate" of Q2 Gross Domestic Product
and July Personal Income and Spending data will all take a distant backseat to
Friday mornings 10:00 a.m. CT speech by Fed Chairman Bernanke to the invited
delegates at the Kansas City Fed's Economic Symposium in Jackson Hole, Wyoming.
If Mr. Bernanke provides any hint in his
address the Fed is "on-go" to launch "QE3" before the end
of September --mortgage interest rates will likely slide notably lower even as
the stock markets soar. On the other
hand, if no such hint is forthcoming and/or if Mr. Bernanke indicates such a
move would be premature in front of pending Congressional action, or lack
thereof, to avert the looming "fiscal cliff" -- stock prices will
almost certainly plummet while mortgage interest rates move sideways to
fractionally higher.
Volatility in the mortgage market has the
potential to ramp up significantly this week and next - driven by Bernanke's
speech on Friday and the release of the August nonfarm payroll data on Friday,
September 7th. These two
upcoming events pack enough market "punch," individually as well as
combined, to influence the trend trajectory of mortgage interest rates into the
first month or two of 2013.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
