OPENING DAY!! GO REDS!!
Uncle Sam will be splashing around in the credit markets this week looking to borrow $82 billion through a four-part debt auction process. The buying appetite the global investment community demonstrates for this week's offerings will sharply influence the trend trajectory of mortgage interest rates over the course of the next five trading session and beyond.
The debt auction series will kick off with the sale of $8 billion worth of 10-year inflation-indexed notes today, followed by tomorrow's $40 billion 3-year note sale, $21 billion of 10-year notes on Wednesday and concluding on Thursday with the sale of $13 billion of 30-year bonds. The probabilities are strong that the price on each of these securities has fallen dramatically enough over the past two weeks that global investors will find them hard to pass up. If so, these events will likely prove to be at least mortgage market neutral.
In other news of the day -- the Institute of Supply Management said its service sector index jumped to a reading of 55.0% in March from a revised 53.0% mark in February. It was the fastest pace of growth in this sector of the economy in nearly four years.
In a separate report the National Association of Realtors said that its Pending Home Sales index, a metric based on contracts signed in February, rose 8.2%, marking its second-biggest gain on record and the largest since October 2001. The Realtors group indicated the sharp rise in home buying activity was largely attributable to homebuyers scrambling to take advantage of the soon-to-expire tax credit programs offered by the government.
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