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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.

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