Daily Commentary by Larry Baer: With no economic news to consider this morning
mortgage investors will likely look to trading action in the stock markets for
mortgage interest rate directional cues. Higher stock prices will tend to
drive mortgage rates fractionally higher while steady to lower stock prices
will most likely support steady to perhaps fractionally lower mortgage rates.
Unless a short-term
funding bill is passed by March 27th, the government could face a
partial shutdown that will undoubtedly compound the effects of tens of billions
of dollars in automatic spending cuts that have begun to take effect since
Congress and the White House failed to reach a budget accord on March 1st.
Brace yourself for
another financial cliff-hanger as both parties resort to politically motivated
brinksmanship instead of coming together to plot a strategy to return the
government to fiscal soundness. The longer and more divisive the process
to reach a budget agreement becomes the more negative the impact the political
wrangling will have on the near-term prospects for steady to perhaps
fractionally lower mortgage interest rates.
Looking ahead to the
coming week -- Uncle Sam will be in the credit markets conducting a three-part
debt auction. The Treasury will sell $32 billion of 3-year notes on
Tuesday, $21 billion of 10-year notes on Wednesday, and $13 billion of 30-year
bonds on Thursday. Keep your fingers crossed fixed-income investors make
a strong showing at this week's government debt sale. A weak Treasury
debt auction series will almost certainly put some upward pressure on mortgage
interest rates. It is a close call - but with yields on the offered
securities at roughly twelve month highs -- the risk of a soft debt sale this
time around is not as threatening as it has been in prior periods.
The economic
calendar will feature February Retail Sales on Wednesday, weekly jobless claims
and the February Producer Price Index on Thursday followed by the February
Consumer Price Index on Friday.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
