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Tuesday, November 18, 2014

Mortgage Bond Market Analysis - pedaling against the wind

Their was good news on the economic front this morning yet the benchmark bond is up 13 basis points as of this writing in spite of it.  PPI MOM was up .2 vs. expectations of -.1 and ex-food and energy it was up .4 vs. .1.  Normally when important data far exceeds expectations, you would expect the benchmark bond to sell off driving rates higher but the bond market showed its resiliency this morning by shrugging off that data and inching higher.  At 103.52 it's 6 basis points above the 1st level of resistance.

Tomorrow's data brings us building permits and housing starts followed by the initial and continuing jobless claims on Thursday - all of these data points can influence bond prices but the jobless claims have the biggest potential to move the market.  With the start of the holiday shopping season nearing (or even started for some of you), seasonal hiring has begun so the employment and jobless claims numbers will be skewed for the next couple of months. Here's today's chart:

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