Daily Commentary by Larry Baer: Back to the future. Mortgage investors
recognize we are back to where we were before the elections. Nothing has
changed significantly.
A sustained upward
shift in employment will be the dynamic that ultimately tilts the long-term
trend trajectory of mortgage interest rates higher. Such a shift is not
yet even a blip on the radar of the most optimistic analyst. Until/unless
job creation reaches the 250,000+ per month pace - a major pillar supporting
the prospects for steady to fractionally lower mortgage interest rates will
remain firmly in place.
With the major
national election now behind us - investors will begin to focus intently on the
political action - or lack therefore - surrounding the avoidance of the
"fiscal cliff" - a $600 billion package of tax hikes and spending
cuts set to kick in at the start of the year. Analysts have warned that
the shock of going over this so called "fiscal-cliff" could tip the
country back into the depths of recession. Should investors begin to
sniff the possibility of a political compromise with enough merit to avoid
economic calamity -- we will likely see a shift in the dynamics supporting
mortgage interest rates at modern day lows. Until/unless such an event
occurs -- mortgage interest rates are unlikely to make an extended move toward
higher levels.
The effects of
Hurricane Sandy have essentially rendered the weekly jobless claims data
useless for the next three or four weeks. The Labor Department reported
earlier this morning that applications for jobless benefits fell by 8,000 to
355,000 during the week ended November 3rd. A Labor Department
spokesperson said the numbers were skewed with one state reporting the loss of
electricity due to the storm suppressed filings, while other states said
workers who lost their jobs as a result of the weather were starting to
apply.
The Treasury
Department is conducting an auction today featuring $16 billion worth of
30-year bonds. These securities should draw a decent bid from domestic
and foreign investors alike. If so, this event will likely prove to be
supportive of steady rates. The final gavel will fall at 1:00 p.m. ET.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
