Thursday, February 11, 2010

Different day - same story.


Mortgage investors are once again taking a cautious "wait-and-see" attitude in front of the Treasury Department's $16 billion 30-year bond sale this afternoon. Tuesday's 3-year note offering and yesterday's 10-year note sale were ugly - which does not bode well for the prospects of robust bidding at today's 30-year bond offering. If this assessment proves accurate, look for upward pressure on mortgage interest rates to prevail for most of the day.


The Labor Department announced this morning that initial weekly jobless benefit claims for the week ended February 6th dropped 43,000 to a seasonally adjusted 440,000. For the week ended January 23rd , enrollment in extended benefits programs increased by 13,208 to 236,041 while enrollment in the government's Emergency Unemployment Compensation program fell by 184,627 to 5.448 million.


Boiling all this statistical mumbo-jumbo down the indications are growing that the labor market is improving - at a just barely perceptible pace. First-time filings for unemployment benefits were kept artificially low in late December and early January because of the holidays and then were biased to the high side in late January as the Labor Department caught up on their claims processing. Mortgage investors essentially shrugged the whole thing off - reasoning that until initial weekly jobs claims stabilize around the 400,000 per week level - net month-over-month job creation will not be strong enough to exert significant upward pressure on mortgage interest rates.



The Commerce Department has postponed the release of the much anticipated January Retail Sales report until 8:30 a.m. ET tomorrow. Both the headline figure and the component of the report excluding auto sales are expected to post modest gains after a surprising slump in December. The slight anticipated improvement for retail sales will likely be viewed as temporary since job creation remains dismal. If so, this event will tend to be mortgage interest rate neutral.