Daily Commentary by Larry Baer: Uncle
Sam will sell $35 billion worth of 2-year Treasury notes at auction today. The auction will conclude at 1:00 p.m. ET and
I'll provide results on my website as soon as possible once the final gavel
falls. Most observers expect this debt
sale to go well with little need for the Treasury Department to raise yields in
order to attract the required capital.
If so, this event will have little, if any noticeable impact on the
current trend trajectory of mortgage interest rates.
The media drama meter surrounding the Kansas
City Fed's Economic Symposium running this week in Jackson
Hole, Wyoming has
dropped by roughly half this morning. Fed
Chairman Bernanke is still scheduled as a key-note speaker on Friday - but
European Central Bank president Mario Draghi will be a no-show. The European Central Bank has a critical
meeting of its own coming up on September 6th and Mr. Draghi's
workload in preparation for that meeting prohibits travel at this time. The market spotlight is now focused
exclusively on Mr. Bernanke.
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
