With nothing in the way of market moving economic data available today, this afternoon's two-year Treasury auction, the first of three Treasury note sales this week, will be the most prominent feature influencing the trend trajectory of mortgage interest rates over the course of this trading session.
Most analysts are anticipating good foreign participation at this afternoon's $36 billion 2-year note sale, particularly from Japan's central bank as they move to recycle their recent currency intervention reserves into dollar denominated assets like Treasury obligations and agency eligible mortgage-backed securities. Renewed financial concerns regarding the fiscal viability of Portugal and Ireland will likely serve as a catalyst to drive capital into the comparatively safe-harbor of U.S. government debt as well.
A well bid 2-year note auction will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.
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