Tuesday, April 28, 2009

Uncle Sam will be looking to borrow $35 billion in the form of 5-year notes in an auction format today. The final gavel will fall at 1:00 p.m. ET. Yesterday's big $40 billion offering of 2-year notes drew decent participation. The credit market may have a little more difficult time digesting today's 5-year and tomorrow's 7-year note offerings. It will likely be difficult for mortgage interest rates to make any headway to new lows -- for at least the next couple of days.


The members of the Federal Open Market Committee opened a two-day meeting this morning. Central bankers will be actively engaged "cussin' and discussin'" economic conditions. However, when their post-meeting statement is issued tomorrow afternoon, it is highly likely these central bankers will have decided to "wait-and-see" before initiating any new monetary policy changes.

The economic data was light but nonetheless encouraging this morning. The Conference Board reported its consumer confidence index for April rose in to a reading of 39.2 - a significant improvement from the March low of 26.9, a number that fell within shouting distance of the record low dating back to 1967. Mortgage investors are far more interested in what the consumer is actually doing - rather than how they say they are feeling - so this index created nothing more than a momentary little knee-jerk reaction in the mortgage market before it was fully discounted in favor of more meaningful macro-economic data due out in the days ahead.

Worth at least a mention in passing was other news this morning from Standard & Poor's/Case-Shiller home price survey indicating for the first time in 16 months the annual decline of the study's 10- and 20-city composite indexes did not fall enough to set a new record. The index showed the year-over-year national decline in home prices slumped 18.6% in February. Experts had anticipated a much sharper value decline. While this data certainly does not indicate a bottom in the housing sector has been reached -- it is perhaps signaling the low is now in sight. Mortgage investors shrugged this information off -- but not before making note to pay attention to next month's figures to determine if a trend change in falling home prices is actually beginning to take shape.