Daily Commentary by Larry Baer 3.28.2013

Daily Commentary by Larry Baer:  Most mortgage investors have already put the finishing touches on their risk management positions as time ticks down to today's early market close at 2:00 p.m. ET. 

The Treasury Department will wrap-up this week's three-part debt auction when the final gavel falls on $29 billion of 7-year notes at 11:30 a.m. ET today.  Today's offering is broadly expected to draw a mediocre bid.  If so, this event will likely have little noticeable impact on the current trend of mortgage interest rates.

Earlier this morning the Labor Department reported the number of Americans standing in line to file for first-time government unemployment benefits rose by an unexpected 16,000 to a seasonally adjusted 357,000.  Jobless claims have risen for the past two weeks, but given their volatility, it is too soon to conclude the job market is showing signs of deteriorating.  Mortgage investors yawned.

In a separate report the Commerce Department said their final "guesstimate" of the pace of economic growth during the fourth-quarter of 2012 improved by 0.4% over third-quarter levels.  The growth rate was the slowest since the first-quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.  It was, however, higher than the government's previous estimate of a 0.1% growth rate.  Much of the weakness came from a slowdown in inventory accumulation and a sharp drop in military spending -- factors that had already been anticipated.  The data had no material affect on the direction of mortgage interest rates today.

Looking ahead to next week -- Monday's March Institute of Supply Management report will be the highlight of a slow start to the week - but things will really heat up on Friday with the release of the March Nonfarm Payroll figures.  The consensus forecast among economists is currently projecting the nation's employers added 197,000 new jobs during the month of March while the national jobless rate held steady at 7.7%.  If the actual numbers match or closely approximate the forecast - mortgage interest rates will not likely move much.  In the unlikely event the headline number shows a gain of 205,000 jobs or more -- and/or the national jobless rate drops to 7.6% or less -- expect mortgage interest rates to move notably higher before the end of the day.

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME

Daily Commentary by Larry Baer 3.27.2013

Daily Commentary by Larry Baer:  Mortgage interest rates got a nice little bump to lower levels this morning as global investors flocked into the safe haven of U.S. dollar denominated assets like Treasury debt obligations and agency eligible mortgage-backed securities.  Fear that bank problems in Cyprus may prove contagious to other financially weak euro zone countries like Italy and Spain ignited the new round of "flight-to-quality" buying.  Europe is a lingering threat with the fragility of its banking systems and U.S. dollar denominated debt instruments are one of the major tools available to global investors to mitigate part of that risk.

In the face of this morning's reaction to renewed banking woes in Europe -- expectations are high today's Treasury Department auction of $35 billion of 5-year notes will be well bid.  If so, the event will tend to support prospects for steady to perhaps fractionally lower mortgage interest rates.  The auction will conclude at 1:00 p.m. ET and I'll post results on my website as soon as possible thereafter.

As they do every Wednesday, the Mortgage Bankers of America have released their Mortgage Application Survey for the week ended March 22^nd.  The refinance index gained 8.0%, while purchase activity advanced by 6.7%.

Refinance activity has improved 2.8% over the past four weeks and is higher by 17% from year ago levels.  Purchase applications have increased by 4.4% over the past four weeks and have advanced by 11% from a year earlier.

During the week, the contract rate for 30-year fixed-rate conforming mortgages decreased by 3 basis points to 3.79%.  The interest rate is 2 basis-points higher from four weeks ago but 44 basis-points lower from a year ago.

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME

Daily Commentary by Larry Baer 3.26.2013

Daily Commentary by Larry Baer:  Demand for American manufactured goods designed to last three-years or more surged 5.7% higher in February - driven entirely by a major pick-up in aircraft orders.  Excluding transportation, orders slipped 0.5%, after January's gain of 2.9%.  The slowdown in durable goods orders was broadly anticipated - with most mortgage investors choosing to shrug the whole thing off.

A separate report from the Commerce Department this morning showed the pace of new home sales declined 4.6% in February.  The data is volatile, and February sales reflect buyer decisions that occurred in late 2012 when concerns over the growth trajectory of the economy were much higher than they are now.  On a three-month average, new home sales are still running at their fastest pace since August 2009.  Mortgage investors gave the data a passing glance - before moving on to put the finishing touches on their pipeline risk management strategies in front of this week's three-part, three-day government debt sale. 

$35 billion of 2-year notes will hit the auction block at 1:00 p.m. ET this afternoon, followed by $35 billion of 5-year notes on Wednesday and the whole thing will wrap-up with the sale of $29 billion of 7-year notes on Thursday.   That's a lot of supply falling into a holiday shortened trading period.  Until the three sales are completed -- mortgage interest rates will likely have a very difficult time trying to move notably lower from current levels.

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME

Daily Commentary by Larry Baer 3.25.2013

Daily Commentary by Larry Baer:  With nothing in the way of economic news or events on tap - trading action in the stock markets will probably exert the most significant influence on the trend trajectory of mortgage interest rates today.  Higher stock prices will tend to drag mortgage rates higher while lower stock prices will probably prove supportive of the prospects for steady mortgage interest rates.

The coming holiday shortened week will be dominated by a $99 billion dollar, three-part Treasury debt auction running from Tuesday through Thursday.  $35 billion of 2-year notes will hit the auction block on Tuesday, followed by $35 billion of 5-year notes on Wednesday and the whole thing will wrap-up with the sale of $29 billion of 7-year notes on Thursday.

The scheduled economic news will be light. February New Home Sales on Tuesday will share what little limelight there is with Thursday morning's release of the final revision to the government's "guesstimate" for Q4 Gross Domestic Product.  The mortgage market will close early at 2:00 p.m. ET on Thursday for the Good Friday Holiday.  The Commerce Department will release the February Personal Income and Sending data on Friday morning - but few will notice since the stock and bond markets will be closed in observance of Good Friday.    

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME

Daily Commentary by Larry Baer 3.22.2013

Daily Commentary by Larry Baer:  With nothing in the way of economic news or events on tap - trading action in the stock markets will probably exert the most significant influence on the trend trajectory of mortgage interest rates today.  Higher stock prices will tend to drag mortgage rates higher while lower stock prices will probably prove supportive of the prospects for steady mortgage interest rates.

The coming holiday shortened week will be dominated by a $99 billion dollar, three-part Treasury debt auction running from Tuesday through Thursday.  $35 billion of 2-year notes will hit the auction block on Tuesday, followed by $35 billion of 5-year notes on Wednesday and the whole thing will wrap-up with the sale of $29 billion of 7-year notes on Thursday.

The scheduled economic news will be light. February New Home Sales on Tuesday will share what little limelight there is with Thursday morning's release of the final revision to the government's "guesstimate" for Q4 Gross Domestic Product.  The mortgage market will close early at 2:00 p.m. ET on Thursday for the Good Friday Holiday.  The Commerce Department will release the February Personal Income and Sending data on Friday morning - but few will notice since the stock and bond markets will be closed in observance of Good Friday.     

THE MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME