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Tuesday, September 16, 2014

Mortgage Bond Market Analysis

It's an uneventful Tuesday as far as economic data and the benchmark bond are concerned.  The bond is up a bit for the 2nd day in a row which is good news but it is 9 basis points off the high for the day and is not having any luck holding the price above the resistance.  The good news is that it's still oversold which means investors might be enticed to buy in the hopes of a nice run up and a quick profit.  With the geopolitical concerns from ISIS and other groups in various regions of the world - including reports of some infiltration through Mexico, one would think that the bonds would get a bit of a bid but for now there's nothing too exciting to report relative to good news on the interest rate front. I would take 6 or 7 more days in a row of the benchmark bond being up 14 basis points a day - hopefully it ends the day up that much or more - but a really strong up day might encourage some follow-through from smaller investors.  Here's a look at the current chart:

The Producer Price Index numbers all came in exactly as expected.  We get the consumer versions tomorrow and then on Thursday we get the weekly initial and continuing jobless claims numbers which typically pull the most weight with rates, one way or the other.  If I needed to lock a loan and had 21+ days until my closing, I'd probably float with caution - it's important to be ready to lock quickly should the market start to turn.  If my loans was closing within 15 days, I would lock now; to keep things in perspective, rates are still VERY low, historically speaking.

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