Daily Commentary by Larry Baer: The only thing really driving changes in
mortgage interest rates between now and the end of the year is comments and
headlines on the fiscal cliff negotiations. Economic data may cause a
temporary little flutter in the market - but any substantial shift in the
current trend trajectory of mortgage interest rates will almost certainly be
tied to events surrounding the looming fiscal cliff.
Keeping the nation
in suspense down to a white-knuckle deadline has become the rule rather than
the exception in Congress in recent years. Persistent worries about the lack of
progress in Washington to avert the economically crippling effects of the
looming "fiscal cliff" continues to underpin the near-term prospects
for steady to perhaps fractionally lower mortgage interest rates. The
"sticking points" in the negotiations appear to be the impasse
created by the president's call for $1.6 trillion in new tax revenue and the
fact there has not been any serious discussions with regard to Republicans'
call for changes to entitlement programs. The clock is ticking.
The Commerce
Department reported earlier this morning consumer spending fell 0.2% in October
for the first time in five months. Some of the decline was attributed to
the impact of superstorm Sandy.
Income was unchanged during the month for the first time since April and
followed a 0.4% gain in September. A 29% drop in gasoline prices helped
to keep inflation contained in October. The Fed's favorite measure of
inflation at the consumer level (the personal consumption expenditure index)
nudged up 0.1% after posting a 0.3% gain in September. Mortgage investors
reviewed these numbers - and yawned.
Looking ahead to the
coming week the following noteworthy economic reports will be competing with
"fiscal cliff" headlines for the attention of mortgage investors -
November's Institute of Supply Management's Manufacturing index on Monday at
10:00 a.m. ET; November's Institute of Supply Management Service Sector Index
on Wednesday at 10:00 a.m. ET followed by the November Nonfarm Payroll report
on Friday morning at 8:30 a.m. ET. All three reports are expected to show
values mortgage investors will likely deem to be mortgage interest rate
neutral.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
