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Thursday, December 11, 2014

Mortgage Bond Market Analysis - Good economic news = benchmark bond sell-off

Good  morning and happy Thursday to you.  There wasn't a lot of data but what there was was good.  The Retail Sales (ex-auto) came in at .5 vs. expected of .2 and previous of .4 - this is negative for pricing.  The initial jobless claims came in a bit below expectations at 294K vs. 295K expected and previous of 297K.  This isn't a real big deal but being below 300K is a good thing.  The import price index is -1.5 vs. expectations of -1.8 so prices and inflation are under control - maybe too good.  The Fed's target inflation rate is about 2% and if prices are going down, that's good for consumers but not necessarily the economy.

The stock market was down big yesterday which is why bonds benefited and received a bid pushing their prices higher and the yields / rates lower.  This morning the benchmark FNMA 3.5 mortgage bond is currently down 19 basis points, 12 points of the morning lows, 25 basis points below the 1st level of resistance and 24 basis points above the 1st level of support.  Here's this morning's chart:

Tomorrow will bring us the PPI and the University of Michigan's consumer sentiment index (not much coming out of the University of Michigan in terms of decent football or basketball so at least they have this, right?).

It's a great time to lock to be safe.  If you decide to float, make sure you watch the market closely.  Some experts are predicting a Santa Clause rally in the stock market which would most likely mean higher rates.  Feel free to contact me if I can help with anything mortgage-related:  702-812-1214.  Make it a great day and please share your thoughts in the comments section or share the blogpost with friends and associates.

Sports note:, My alma mater, the University of Utah, took on BYU in basketball last night at BYU and the #13 Utah Utes won in a thriller, 65-61.  Next up is Kansas in Kansas on Saturday.

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