Daily Commentary by Larry Baer: Mortgage interest rates are feeling a
little upward pressure for a second consecutive day as improving housing data
-- and cautious optimism lawmakers in Washington will reach a deal to avert a
budget crisis that could send the economy into a recession -- take a little of
the shine off of safe-haven investments like Treasury debt obligations and
agency-eligible mortgage-backed securities.
According to data
complied by the Commerce Department residential construction rose in October
posting a 3.6% gain from September and marking its fastest pace of growth since
mid-2008. Multifamily construction led the way while single-family
housing starts fell a modest 0.2%. Nonetheless, the pace of single family
construction has surpassed the surge in homebuilding created by the 2010
homebuyer tax credits. Building permits, an indication of future
construction starts, fell by 2.7%. The drop in October permits reflected
fewer applications for multifamily construction, while permits for single-family
homes rose 2.2% to its highest level since July 2008.
The October housing
starts and building permits report was stronger than the vast majority of
analysts had anticipated. The surprise data brought in a few new sellers
into an otherwise thinly traded mortgage market creating the downward price
pressure evident in today's early going.
Trading
activity in the mortgage market continues to fade rapidly in the run-up to
Thursday's Thanksgiving Holiday - and interaction between buyers and sellers
will likely be exceptionally sparse during Friday's shortened trading
session. Expect unusual and erratic swings in your investors' rate sheets
prices during this period of time - particularly with respect to prices -- and
less so with respect to rates.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
