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Tuesday, November 25, 2014

Mortgage Bond Market Analysis - Can't wait for Thanksgiving edition

Happy Tuesday morning.  We have a mixed bag of data.  The FNMA benchmark bond is currently down 5 basis points (probably a little profit-taking) on a number of data points.  The first to hit was GDP which came in at 3.9 vs. expectations of 3.3 and previous of 3.5.  This news which shows a decent economy (in spite of a week job market) was then offset by the consumer confidence numbers which came in FAR below expectations (96) at 88.7 (it was also below the previous of 94.1).  Additionally, the Richmond Fed Manufacturing Index came in at 4 vs. estimates of 16.5 and a previous of 20 - this is a HUGE miss.  The Case-Schiller Home Price index came in at 4.9 which was a bit above expectations of 4.6 and below the previous month's reading of 5.6.

The Relative Strength Index (RSI) is overbought so there is a signal for investors to sell in the face of some mixed data.  Here's the chart:

There's another cornucopia of data coming out tomorrow with durable goods orders, Chicago Purchasing Manager's Index, University of Michigan's Consumer Sentiment Index, Pending Home Sales and New Home Sales.  They can all have an influence on the bond market but the jobs data points are still by far the most influential and since Thursday is a holiday, we won't get our biggest report of the week:  initial and continuing jobless claims.  Next week will provide us with not only the regular Thursday jobless claims reports but since it will have the 1st Friday of the month, we will also get the employment report - these reports will be skewed with some holiday employment numbers figured in so it will make it more difficult for traders to decipher the true information.

Feel free to contact me if I can help with anything mortgage-related - 702-812-1214 - but for now you're probably o.k. to float if your loan isn't closing for a few weeks; if you are closing within 15 days, I'd take advantage of these great rates.  As always, make sure you keep your finger on the pulse because the market can move against you quickly so it's important to work with a loan officer who can react quickly.  Make it a great day.

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