Daily Commentary by Larry Baer: Different day - same story.
This week's economic
calendar is extremely light, highlighted almost exclusively by Thursday's
weekly jobless claims report. Getting a clean read on the true underlying
condition of the labor market is difficult during the holiday season.
Mortgage investors will likely continue to shrug the initial claims data off
for at least another week. If my assessment proves accurate, this report
will not influence the current trend trajectory of mortgage interest rates in
any meaningful way.
Uncle Sam will be in
the credit markets today looking to borrow $21 billion in the form of 10-year
notes and he will be back tomorrow looking to borrow $13 billion in the form of
30-year bonds. Both auctions will conclude at 1:00 p.m. ET and I'll post
the results as soon as possible once the final gavel falls.
It is my strong
belief the stock markets will experience a very short-lived bear-market rally
either today, January 9th or tomorrow, Thursday, January 10th.
If my assessment proves accurate, improving stock prices will make it
difficult, if not impossible, for mortgage interest rates to make much headway
toward lower levels.
Any improvement in
stock prices will not likely last long and I suspect the counter-trend rally in
the stock markets will have run its course by Monday, January 14th
or Tuesday, January 15th . The ensuing sell-off in the
stock markets will send capital once again racing back into the relatively safe
haven of Treasury debt obligations and agency eligible mortgage-backed
securities - a process that will almost certainly prove supportive of the
prospects for steady to perhaps fractionally lower mortgage interest
rates.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
