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Wednesday, December 3, 2014

Mortgage Bond Market Analysis - Hump day edition

Happy Hump day (Geico Hump Day commercial).  December is a month that is about joy for Christians and Jews alike as we both celebrate important holidays but as far as the benchmark mortgage bond is concerned, there hasn't been any joy so far in December.  With no economic news on Monday, we saw a 29 basis point sell-off which was probably due to profit taking.  Yesterday we had one piece of economic data (construction spending) which came in higher than expected and the selling continued with a 24 basis point decline.

Hump day brought us ADP Private payrolls which came in below expectations at 208 vs. 221 expected and 233 previous but then we had the ISM Service Sector index coming in at a robust 59.3 vs. expectations of 57.5 and previous of 57.1  and we are seeing a bit more selling.  The market has rebounded off its lows for the morning and the benchmark bond is currently down only 1 basis point.  Here's the chart:

As you can see, the benchmark bond is now below the 1st level of resistance.  The RSI is also no longer overbought.  Tomorrow will bring us the jobless claims numbers and then on Friday we will get the all important non-farms employment report.  If you aren't a risk-taker, you may want to lock ahead of these reports - after all, rates are GREAT.

On a side note, for you college basketball fans, there are a couple of great games on tonight.  #2 Wisconsin plays #4 Duke and #8 Wichita State plays my alma mater, #25 Utah.  This is such a great time of year with the holidays coming up which means the kids will be off of school, lots of great college basketball and all of the college football bowl games.  Don't even get me started about all of the great food.  Please call me if I can help with anything mortgage-related.  Make it a great day.

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