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Friday, October 31, 2014

Mortgage Bond Market Analysis - Halloween Edition

Happy Halloween.  The benchmark bond got a scare this morning when the Chicago PMI came in at 66.2 vs. estimates of 60.  This is a strong reading and the knee-jerk reaction was to recommend locking.  Personal consumption expenditures came in just below expectations at 1.4 vs. 1.5.  Rates are great right now but it's a bit frightful trying to guess where they might go from here with a recent slide (albeit greater in time than in price magnitude) pushing the RSI to oversold, it would be tempting to think we might get a rebound such that we should float.  Behind the mask, though, we might find that bond prices have further to fall in the near-term, pushing rates higher.  As low as we are right now and with an economic recovery hopeful sometime in my lifetime (I'm not even 50), I would think that rates are bound to go up over the next year or so unless the Fed decides to put another quantitative easing costume on the bond market again which I don't think will happen.

Next week will be very telling because we get the employment report on Friday - jobs numbers over 200K will show that we are starting to get some legs to this ghostly recovery.  The employment reports in December and January will be skewed by the seasonal hiring so it will be hard to know exactly what the economy is doing based on those numbers.  The retail sales will be interesting to follow this holiday season because the consumer confidence numbers have been very high recently which should translate into a strong holiday season for retailers.  Here is today's bond chart:

My month on the bike:  October was my best month on my bicycle since September of 2012 when I road 719 miles.  I road 655.41 miles this month in 21 days on the bike - 31.21 miles per day.  I averaged 18.6 miles per hour and climbed over 33,600 feet.  My goal is to put another 600 miles on the bike in November but as the temperatures drop along with being out of town for about 10 days, it's going to be a challenge.  How was your October and what are your goals for November?

Please feel free to contact me if I can help with anything mortgage related.  Have a happy and safe Halloween.  Please like, comment, share and subscribe.

Thursday, October 30, 2014

Mortgage Bond Market Analysis - Halloween Eve

The mortgage bond market has been frightfully calm over the last week and a half and the volatility is nothing more than a ghost of weeks past; it could be lurking just around the corner ready to put some fear into us should the economy show more significant signs of improvement.  Since October 15th when the benchmark FNMA 3.5 closed at 103.8, we are down to 103.45 two weeks later and trading in a very narrow range.  October 15th and a couple of days after that provided us with some MASSIVE volatility which resulted in some wild price swings but since then the market has been eerily calm.

The geopolitical landscape has calmed down along with economic news that hasn't been earth-shattering in either direction.  I think that the bond market is tip-toeing through the alley hoping not to stir up any ghosts or goblins - of course, some would say the same of the economic recover which is a main reason why we are where we are as far as interest rates are concerned.  Here is the current bond chart:

The slide in the stock market played a part in the run-up for the benchmark bond through the 15th and then a minor recovery in the stock market in addition to some stabilization in the geopolitical climate (including some calming of the nerves regarding Ebola) has factored in to the recent decline of the benchmark bond.

Please feel free to comment, like, share and subscribe.  I always like to get input from readers.  Have a great day and contact me if I can help you with anything mortgage related.  Until tomorrow - make it a great day.

Monday, October 20, 2014

Mortgage Bond Market Analysis - Happy Monday

Happy Monday.  I hope you had a great weekend.  I did.  I took my son to Garden Grove, California for an AAU basketball tournament and his 8th grade team won their division.  I love to share experiences like that with him.

On the mortgage bond front, there is no data this morning and still a bit of a positive bias until the benchmark bond hits the resistance level and then it tops out.  It has been toying with the 103.80 resistance level for 4 days in a row now and hasn't managed to close above that level.  If it can close above the 1st resistance level, there's room for more improvement.  That said, there's also plenty of room for prices to fall consider the support level is at 103.36 and the benchmark bond has been over bought since September 25th.  Here's the chart:

I'll be up in Salt Lake City on Business through Wednesday evening so I doubt I'll be able to post anything  until Thursday.  Please feel free to contact me at 702-812-1214 for any information you may need on the direction of interest rates or mortgage programs.

Please like, comment, share and subscribe and make it a great week.

Friday, October 17, 2014

Mortgage Bond Market Analysis - the All Quiet on the Western Front edition

The Benchmark bond is taking a breather after two days of high volatility.  The economic data has been a mixed bag over the last two days with no definitive information about where the economy is headed from here.  This morning, the data was mostly positive if not super strong with housing starts (beat expectations and previous month) and building permits (came in slightly below expectations but above last month) both coming in above the 1000 level and the Michigan Consumer Confidence reading was also up a couple of points vs. expectations and 1.8 points vs. last month.

RESISTANCE:  good for weight training, not good for the benchmark bond.  The first level of resistance at 103.8 has proven to be very strong with the benchmark closing below it on Wednesday after being well above it (121 basis points higher, in fact) and then closed below it again yesterday after another strong start that pushed the price above the 2nd level of resistance for the 2nd day in a row.  The more times it tries to break it and can't, the stronger that resistance level gets.  The bond got to within 5 basis points of the 1st level of resistance this morning and has since sold of a bit to where it is currently down 15 basis points.  Here's the chart:

I expect that we will see a relative quiet day compared to the last two where we got lots of improvement and worsening alerts in addition to trend reversal notifications.  There isn't a ton of data on tap for next week but I think bond traders will be looking for any direction they can latch on to including getting some influence from the current geopolitical climate and the global economy.  A quick look at the bond market as it stands right now shows a bit more selling with the benchmark bond now down 19 basis points.

Riding time:  It's time for a ride and then I'm off to California for a quick trip tomorrow for my son's basketball tournament.  What are you doing for exercise and / or fun this weekend?  Enjoy and be safe and please feel free to comment, share and subscribe.

Thursday, October 16, 2014

Mortgage Bond Market Analysis - The What the Heck Just Happened edition

HOLY COW!!  It has been a crazy ride over the past couple of days.  Yesterday started up about 84 basis points and then shot up even further to up 154 for a high then down to where it was only up about 22 basis points and ending the day up 33.  All in all rates went down about .375% and then back up about .25% and the initial up and down swing happened in about an hour so actual rates were never published with what they could have been.  There were about 9 or 10 various rate alerts and trend reversals due to tame inflationary news on one hand coupled with other week economic data and unsettling statements from Putin served as the catalyst for the big move up in bond prices.  By the end of the day the stock market had recovered much of its losses and the money had flowed out of the bond market as a result with the price of the benchmark bond closing 121 basis points off of it's high for the day.

More craziness this morning:  This morning the benchmark bond was up as high as 67 basis points with the thought that maybe the sell-off in the latter part of yesterday was an over-reaction and probably some betting that the initial jobless claims report would be week.  The report came in surprisingly strong and other economic news this morning surprised to the upside, for the most part, and the benchmark bond has sold off since.  It is currently of its lows of being down 21 basis points as it is currently down 4 as of this writing.  Here is a look at the chart from a few minutes ago:

Lots of volatility yesterday and today and with the geopolitical news adding to the instability, it's anyone's guess as to what will happen next.  We've seen a mixed bag of economic data over the last couple of days but the volatility will likely decrease from the craziness we saw yesterday and early this morning.  Rates are still amazing and much lower than any bond market expert would have anticipated at the beginning of the year.  It's a great time to lock in a low rate.  Please like, comment and share - I'd love to hear your thoughts on what's going to happen with rates.

Tuesday, October 14, 2014

Mortgage Bond Market Analysis - Sorry for the week off version

It's Tuesday morning and the mortgage bond market is starting the shortened week (it was closed yesterday for Columbus Day) off strong thanks to another big down day in the stock market yesterday.  The yield on the 10-year treasury is well below where the experts thought it would be at this time of year considering the Fed is nearly complete with the tapering of the quantitative easing program and the though of an improved economy.  The fact that the economy hasn't improved nearly as much as most hoped for and that the global economy, especially in Europe, is very week is driving these low rates.  Also helping the benchmark bond is the fact that there's a lot of other global issues with ISIS and Hamas, the issues with Russia, the Ebola virus as well as other things.  Here's the chart:

As you can see in the chart, the benchmark bond has bumped off of both resistance levels this morning and is 12 basis points of its high for the day.  The Relative Strength Index is overbought (and has been since September 25th) so it's hard to think that there is much left, if any, in this great run.  The current price is well above all of the moving averages as well so I would look for some profit taking if nothing else in the near future.

This week's economic data:  Tomorrow we get the PPI (ex-food and energy) and on Thursday we get initial and continuing jobless claims along with capacity utilization, industrial production, Phillie Fed Manufacturing survey, and NAHB Housing Market index.  On Friday we get housing starts, building permits, University of Michigan Consumer Sentiment index and a speech from Janet Yellin.  The data most likely to impact rates one way or the other is the numbers for jobless claims.  I always say "don't be greedy."  We've had some great improvement in the bond market over the last 3 weeks - if you have a loan closing in the near future, I would consider locking - especially before Thursday's data release.

Inspiration:  I had an idea to add this section - don't know if I'll do it every time but I wanted to add a little more to these posts.  I love sports and my main activity to get and stay fit is bike riding.  I also love music - I write and produce in my home studio and I love watching YouTube videos of young musicians.  So the nature of this section will be to either share my accomplishments in the hope of inspiring you or to share something from YouTube or other similar source to provide inspiration which hopefully carries over into your work performance.  For some background I haven't ridden nearly as much over the past two years as I did the previous three.  Last year I rode a total of 1,940 miles - this year I'm just over 2,500 miles so I'm well ahead of last year.  Last month was my biggest month in two years with 540 miles and I'm trying to beat that this month (I missed 4 days at the beginning of the month on a hunting trip and will miss 5 more on a business trip).  I have ridden 335 miles so far and hope to be at 432 after Friday's ride.  I set a personal best time for my 35.58 mile route yesterday with an average speed of 18.8 mph - beating my old time by 1:20 and I followed that up with my 3rd best time this morning on my 25.97 mile route with an average speed of 19.1 mph.  Time to get busy building relationships and helping people finance their homes.  What are your goals and achievements in exercise, music or the business world - or anything else for that matter?  Make it a great week and feel free to call me if I can help with anything mortgage related:  702-812-1214.

Wednesday, October 1, 2014

Mortgage Bond Market Analysis - Hump Day Version

It's hump day and it's also the day before the jobless claims numbers are released and two days before the employment report - both of which could influence interest rates.  The ADP private payroll numbers came in a bit better than expected at 213 vs. 210 expected and 202 previous, but most people know to take this number with a grain of salt.  Construction spending was down -.8 vs. expected of +.4 and previous of 1.2.  ISM Manufacturing index also came in below expectations at 56.6 vs. 58 expected and 59 previous.  What does all of this mean?  It's PARTY TIME - the benchmark bond is currently up 42 basis points and we are at our highest level in over three weeks.  Rates are looking really good right now and I highly recommend locking and taking advantage of this move since the jobless claims and employment report could easily take it all away.  Of course, they could also surprise to the downside and impact rates positively.  No one has that crystal ball but we do know that we have seen significant improvement in the mortgage bond market over the last couple of weeks and now is a great time to lock.  Here's the chart:

In addition to the upcoming economic data releases tomorrow and Friday, there is also the fact that the benchmark bond is overbought which means investors could start to sell and take some profits and there is some pretty strong resistance at the current price point.

I won't have access to a computer tomorrow or Friday - I'll be out in the woods camping with a friend of mine.  I'm excited to see what happens with the data the next two days.  Lock now or roll the dice?  That's the question.  Please like, comment, share and subscribe.  Make today great.