Mortgage investors largely shrugged off this morning's data from the Labor Department showing the number of American workers filing for first-time jobless benefits fell by 31,000 during the week ended August 21st.
This freshly updated story from the labor sector has done nothing to resolve the debate currently raging among market participants over whether mortgage interest rates have moved to unsupportable levels - or whether the steady drumbeat of poor economic data and the seemingly insatiable appetite for safe-haven debt from domestic and foreign long-term investors will be strong enough to push home financing rates to astonishing new lows. The jobless claims data series of late has certainly proven mixed enough to support both sides of the argument. Looking at the reams of other data pointing at a stumbling economy -- I personally see a number of reasons to believe the threat of notably higher mortgage interest rates is not imminent just yet.
Uncle Sam will round out this week's four-part borrowing spree with the sale of a $29 billion stack of 7-year notes this afternoon. Tuesday's 2-year note offering and Wednesday's 5-year note offering were each sold at record low yields, and there is little reason to expect demand will not be solid at today's auction as well. If my assessment proves accurate, this event is unlikely to create much, if any reaction in the mortgage market.
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