Daily Commentary by Larry Baer: Trading is
lethargic in the mortgage market this morning with buyers slightly outnumbering
sellers.
Treasury debt
obligations and agency-eligible mortgage-backed securities have seen their
prices edge slightly higher today as concerns about Greece's
ability to meet the terms of their bailout agreement have risen sharply.
The International
Monetary Fund, one of Greece's
main lenders, said in a report earlier this morning that Athens
will likely miss the five-year debt reduction target that is one of the
conditions for the country's 130 billion euro bailout. That news has unnerved many global investors
and is putting pressure on stock prices which in-turn has created a decent
amount of "flight-to-quality" support for Treasury debt obligations
and agency-eligible mortgage-backed securities.
The Treasury
Department will be in the credit market today looking to sell $32 billion worth
of 3-year notes. The auction will
conclude at 1:00 p.m. ET. This event is
not expected to influence the current trend trajectory of mortgage interest
rates one way or the other.
Trading
activity in the stock markets will likely exert the largest influence on the
trend trajectory of mortgage interest rates over the mortgage market's
remaining four trading sessions this week. Higher stock prices will tend to put some modest
- but nonetheless noticeable - upward pressure on rates while lower stock
prices will almost surely prove supportive of the prospects for steady to perhaps
fractionally lower mortgage interest rates.
My timing models are
suggesting the period from Thursday, October 11th through Monday,
October 15th carries a high probability of representing a key
turning point for stocks.
Heads up.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
