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Thursday, December 31, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday, New Years Eve Edition

The major holidays are almost over and we'll soon be back to our normal schedules but for now, we have the last of 2015's economic data and it's mixed (go figure) and mostly weak.  In my last post I wrote last weak I think I mentioned that I would be available but probably not writing much.  Here's a quick recap of the week.  Monday was a very quiet day with the FNMA benchmark bond finishing up 8 basis points.  Traders decided to sell on Tuesday with consumer confidence coming in much higher than expected (funny since Initial Jobless Claims were also much higher than expected today).  The bond sold off 26 basis points - not a major move but one of the bigger moves of the last couple of weeks.  Yesterday the bond recovered a bit, closing up 12 basis points with no real impetus for the move but it traded in a tight range all day and has been in a tight range for a while now.  This morning, the only bit of good economic news was the continuing jobless claims that came in lower than expected while initial claims came in 17K higher than expected at 287K.  Another really poor reading for the Chicago Purchasing Manager's Index is helping push the bond higher this morning.  Expectations for the Chicago PMI were 50 (below 50 is retraction, above is growth) and it came in at 42.9.  This is some recovery.

Needless to say, traders are buying bonds on this weak economic data and the FNMA benchmark bond is currently up 27 basis points.  The RSI is just above the mid-point between oversold and overbought so it's a non-factor.  The biggest headwind the bond will face is the 2nd level of resistance which is 103.21 - current price is 103.19, 4 basis points off the morning high.  With an early close to the market today and probably a light staff of traders, my guess is that it closes somewhere around where it's trading right now.  I think it's a good thing to lock now with rates still very good.  We could see some improvement next week with heavier volume returning after the light holiday season.  This would be a continuance of the buying based on the weak data today.  It's important to remember that next week is jobs week with the ADP Private Payroll report being released on Wednesday, Jobless Claims on Thursday and the unemployment rate and non-farm payrolls on Friday.  To be safe, I'd lock before these reports, especially Friday's.  If your lender has a float down option and the data is really bad such that traders buy bonds and push rates lower, you have the best of both worlds:  protection ahead of the reports with the ability to capitalize on them if rates get better.

That's all for this year.  I hope 2015 was a great year for you and that 2016 will be even better.  I'm always available to help in anyway I can and I would really love to earn your business.  Have a very happy and safe New Year.  

Thursday, December 24, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday AND...Christmas Eve

It's Christmas Eve and my stomach is already growling for the turkey dinner we're going to be having later today.  There's been a fair amount of (mixed) data over the last couple of days.  I intended to write a post yesterday but then had major problems with my internet and had to replace a modem so here I am.  Rather than go over every piece of data individually, I'll just say that the data was mixed but leaned toward good for the economy and not so much for rates.

In my post on Monday I recommended locking and taking advantage of the recent gains.  I also said that if you are going to float, watch the market closely so that you could act quickly to lock in case it moved against you.  After closing at 103.25 on Monday (43 basis points above Wednesday's close), Tuesday brought a different tone for the FNMA benchmark bond thanks to the data.  It was basically a steady sell-off throughout the day with the bond closing down 33 basis points at 102.92.  Yesterday was a very quiet day with very little movement.  The benchmark bond closed 14 basis points above it's low for the day but still down 1 basis point.  The market closes at 2:00 EST today and I really think that very little will happen.  Jobless Claims were a bit better than expected at 267K vs. 270K.

Locking wouldn't be a bad thing.  I don't expect too much to happen next week in between the Christmas and New Year's holidays but you never know.  Remember that light trading can be very volatile so if your lender offers a float down options I prefer to protect my clients by locking in case bonds sell off and rates move higher but if there is an impetus for traders to buy in the short term pushing rates low enough to be able to float down, that is the better option as far as I'm concerned.   That's all for now.  I probably won't have much in the way of posts next week but I will be available if I can help with a pre-approval or if you have questions regarding locking / floating.  I can be reached at 801-853-8720 or 702-812-1214 or by email at  Have a very Merry Christmas.

Monday, December 21, 2015

Mortgage Bond Market Analysis - Twas the Monday Before Christmas...

Twas the Monday before Christmas, only four days to go, 
My loan was submitted but I didn't know.
Should I lock or float?  What will rates do?
The anxiety is unnerving...if only I knew.

I looked high and low to see what I could find,
Nothing but sales pitches and fluff and things of that kind.
I asked friends and family about what they thought,
Some said to lock, some said I should not.

I turned to my Realtor to see if he could provide a clue,
But he said that's not his job, that's for loan officer to do.
So I called my loan guy who didn't hesitate.
He said "Lock right now; rates are great."

He talked about mortgage bonds and the charts he used,
He sounded like he knew, but I was sure confused.
So I asked him more questions and got great answers galore,
He gave me all the information I was seeking, and then gave some more.

I'm so happy I used him, he got me the perfect loan.
He helped me understand my choices to best afford my home.
He taught me financial concepts and strategies no loan officer ever had.
He even taught me more than my dear old dad.

He referred great professionals to help me in my quest,
To make sure my financial future would be the absolute best.
Now when people ask what mortgage guy is most prominent in my head,
I tell them only one name comes to mind - that name is Jed.

That's my little marketing poem - I hope you got a chuckle out of it along with the message that I will go above and beyond the typical loan stuff.  As I've mentioned before, I always try to add value to my referral partners and my clients.  My financial background as a Series 7 Licensed Representative when I was with Fidelity Investments helps me provide a financial perspective to clients that adds significant value to their transaction.  Helping them to lock at the right time gives them a better chance to get the best rate as opposed to those who claim to have the best rates - anyone can make that claim.  It takes an understanding of the mortgage bond market to deliver the best rates more often than not.

Referring financial professionals like CPAs, financial planners and estate planning attorney's is another way I add value to clients and referral partners and it helps complete the process for my clients.  Whether it's teaching clients the best strategies for real estate investing or the financial concepts behind the optimized down payment amount, I provide my clients with the expertise they need to give them the best chance at success while helping generate more business for my referral partners.

The bond market now and this week:  As I mentioned in the poem, now is a good time to lock.  After a 27 basis point increase to the FNMA benchmark bond on Thursday, the market provided some follow through on Friday with a +13 day and it is currently up another 9 basis points.  I expect the week to be quiet with many traders taking an early holiday.  As I said before, lighter trading can mean more volatility so a bad apple can spoil it for the bunch.  Floating isn't a bad thing at this point since the Fed has made its decision and the GDP numbers we'll see tomorrow aren't likely to be a big mover at this point.  As always, if you do float, make sure you keep a close eye on the market so that you can move quickly to lock if traders start selling.

Make it a great day and contact me if I can help with anything - 801-853-8720 or 702-812-1214.

Friday, December 18, 2015

Mortgage Bond Market Analysis - TGIF edition

TGIF!!  This is also my son's last day of school for the Christmas break - I love having the kids home.  Tomorrow is a BIG day with my son playing two basketball games for his high school team and the Utes play Duke at Madison Square Garden at 12:00 EST while the Utah football team plays BYU in the Vegas bowl at 3:30 EST.  Needless to say, I'm going to have to record both of the Utah games since my son's games will overlap both games a bit.  But on to the matter at hand - the mortgage bond market and the interest rates that are derived from it.

There was no data today and it will be light next week.  If you read my post yesterday, you know that I recommended floating (with caution - keep a sharp eye on the market) and today we are getting a bit of follow-through.  The FNMA benchmark bond closed up 27 basis points yesterday and is currently up 16 basis points, 4 basis points off its high for the day and 6 basis points below the 1st level of resistance which sits at 103.31.  As for the RSI, it is below the mid-point between oversold and overbought so there's more of a chance for more buying.

I will reiterate what I wrote yesterday when I said that next week will be a light trading week which means there could be some wild swings...that don't necessarily mean anything.  Markets act completely differently on low volume which is why you could pick up some nice gains if you float but it's also why you could lose them all of you don't watch the market closely and lock quickly if there's a swift move to the downside.  I'm available for you through the holidays and would welcome the opportunity to help you, a client or a friend - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Thursday, December 17, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

With all of the excitement yesterday from the Fed, Jobless Claims Thursday is taking a big back seat.  It shouldn't come as a surprise that we have some mixed data - nothing to big one way or the other, though.  Initial Jobless claims came in a tad better than expected at 271K vs. 275K expected.  Continuing Claims came in worse at 2,238K vs. expected of 2,220K.  In keeping with many of the other poor manufacturing data releases, the Philly Fed Manufacturing Survey came in at -5.9 vs. estimates of +2.0 and previous of 1.9.  Finally, Leading Economic Indicators came in at .4 which was better than estimates of .1 but worse than the previous reading of .6.

Yesterday I wrote about how we could see some buying in the mortgage bond market if the Fed came out with a weaker rate increase than expected.  While they raised the rate by the expected .25%, their comments were quite dovish and it did lead to some initial buying.  The FNMA benchmark bond was up as much as 20 basis points before retreating and closing down 9 basis points.  With more mixed data this morning, traders are in a good mood and doing some buying with the bond up 26 basis points.

After a 9-1 vote in October against raising the Fed Fund rate / target range, yesterday the vote was unanimous to raise it.  "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent (italics added)."  The range was 0 - .25% and it's now .25% - .5%.  The expectation is for 1.375% by next December which is an average increase of less than .125% per FOMC meeting which is still pretty accommodative.  "The stance of the monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation."

There you have it.  It's not the end of the world and with a stronger economy and higher employment, more people should be able to qualify for mortgages to buy homes which is a great thing for Realtors and mortgage lenders like me.  Check out my Free Mortgage Report  for a better understanding of the mortgage process, mortgage programs, mortgage insurance and strategies for your financial future.  Feel free to share it with friends, family and clients.

Tomorrow is a slow day and with the Fed's actions behind us, I am recommending to float (with caution).  If you have a loan closing in the next 15 days, I would lock and take advantage of this morning's gains but if your loan isn't closing for 15-30 days, I'd float and see if we get a bit of follow through tomorrow and Monday.  Trading will be light next week because of the holidays so it won't take as much to move the market one way or the other so it will be extra important to keep a close eye on the market if you are floating.  As always, I'm here to help - 801-853-8721 or 702-812-1214.  Make it a great day.

Wednesday, December 16, 2015

Mortgage Bond Market Analysis - Judgment Day

It's December 16th - not what you would typically consider as a very important day in December, unless you are anxiously awaiting the Fed's Interest Rate decision.  Today at around 2:00 EST, we will get the news about whether they have decided to start raising the Fed Funds Rate or not.  Traders have been preparing for a raise this week by selling the FNMA benchmark bond and pushing it down 48 basis points on Monday followed by another 12 basis points yesterday (finishing 19 basis points off its low) and it is currently down 12 basis points.  I don't expect a lot of fluctuation in price before the announcement.  I'm also not sure that a raise is fully priced in which means that there may be more selling if the Fed announces they are raising rates.

We had more data yesterday and today for the Fed to consider when they make their decision (I wish I were a fly on the wall in that meeting so that I can hear who's saying what and how strong their convictions are along with what they are paying the closest attention to).  Yesterday, the YOY CPI data, ex-food and energy, came in at 2% (the Fed's target, though this is just one of the inflation measures they use).  Today, November Building Permits were 1.289mil, much higher than the 1.150mil expected.  Housing starts were also much better than expected at 1.173mil vs. expectations of 1.14mil.  November Industrial Production was -0.06 vs. expectations of +.1 and Capacity Utilization was 77% vs. expectations of 77.5%.  The fact that we have a lot of headroom in terms of capacity means that inflation is likely not a big deal from the manufacturing side for at least a little while.  We know from the various manufacturing indices that manufacturing is mostly week and this morning's number confirms this; however, we also know that our economy is about 2/3 service and 1/3 manufacturing and with strong readings from the service sector, the Fed has more reason to raise rates.

From a technical standpoint, the first support level is at 102.73 (current bond price is 102.80) and the RSI is a non-factor at this point.  I might also add that the GNMA bond is underperforming the FNMA as it is down 39 basis points.  Like I said earlier, I'm not sure if a Fed increase is fully priced in, if it is, we may not see much (or any) sell off after the announcement; it is possible that we could see some buying if traders are expecting a .25% increase and the Fed only raises rates by .125%.  I'm not predicting anything, I'm just letting you know some of the possibilities.  I've been saying to lock for several days in advance of decision day today.  I still think there is more benefit to locking and removing the downside risk than I do to floating in the hopes of some price improvement.  I'd love to get your thoughts - please feel free to comment below.  Contact me if I can help with anything.  When it comes to interest rates, no one lender has the best rates every single day and the most important thing regarding interest rates is to work with a lender that has a good idea of when to lock because understanding when to lock is more important than using a lender who claims to have the lowest rates.  Of course, there are many other things that come into play relative to getting a mortgage such as the overall costs which include opportunity costs - these are dependent on how the loan is structured.  I can be reached at 801-853-8720 or 702-812-1214.  Make it a great day.

Monday, December 14, 2015

Mortgage Bond Market Analysis - What the heck is going on edition

It's Monday of Fed decision week and the bond market is back to reality.  Friday we got a gift when, in spite of better than expected data, traders still sold and rates got a bit better.  It was a one-day respite of the selling in advance of the Fed's decision on interest rates which will be announced on Wednesday.  As I was reading some things this morning I came across a few interesting thoughts about what the Fed will do and why.  He thinks that the Fed has to raise rates so that there is room to lower them again if / when the economy stumbles again.  He said that markets aren't buying the Fed's belief of continued growth.  Indeed, we have seen too much mixed data and most of the important data hasn't shown sustained growth trends; employment, manufacturing and service sector data have waffled and been week at best with few exceptions.

This same expert also noted that markets expect China's economy to continue to weaken and that the EU is worried enough that they are providing stimulus to the tune of 60bil euro's per month.  The PPI was basically meaningless last week with a reading of .5%.  We will get the CPI tomorrow and the Fed may be able to justify an increase based on that and the recent jobs data but even then, there have been misses and the numbers may only be good because of the seasonal employment boost.

In any case, the FNMA benchmark bond is down 34 basis points today after ending up 40 basis points on Friday.  At 103.17, it is currently 5 basis points below the 1st level of resistance.  I'm not sure this matters since the focus is all about what will the Fed do (the expectation is for them to raise the Fed Funds rate) and what will they say - traders want information about the future.  Justified or not, I would be locked - if you are floating, lock.  As I've said before, as far as bond prices are concerned, there is much more potential for downside risk than upside reward.  If what the Fed says and does provides impetus for traders to sell, it may go on for a few days or more.  Be safe and call me if I can help with anything - 801-853-8720 or 702-812-1214.  Make it a great day.

Friday, December 11, 2015

Mortgage Bond Market Analysis - Merry Christmas and Happy Chanukah edition

It's a great day all around.  It's Friday - for what that's worth, which may mean a weekend for some and more work for others.  It's also a day with a market anomaly.  Today we got some relatively important data that will factor into the Fed's decision next week.  Here's a look at all of the data.  November Retail Sales came in at .2%, a tad bit below estimates of .3%.  Ex-auto, the number was better at .4% vs. .3% estimates.  The PPI came in at .3%, much better (at least as far as percentages are concerned) than the .1% expected.  Core PPI (YOY) was also much stronger than expected at .5% vs. .2% estimated.  What we make of this is that consumers are starting to act on their sentiments by opening up their wallets.  Additionally, inflation is ticking up at the producer level but it is still quite a bit below the 2% target level of the Fed; the CPI, which comes out on the 15th, is really the number the Fed will be watching as far as inflation is concerned, though.  October Business Inventories were .0% vs. estimates of .1% and the Michigan Consumer Sentiment Index came in at 91.8 vs. estimates of 92 and previous of 93.1.  This is still a strong number.

Here's where the anomaly comes in:  we had better-than-expected data for the points that the Fed is going to be watching more closely and yet the FNMA benchmark bond is up quite strong.  It is 14 basis points of its morning high but still up 22 basis points on the day after losing 20 basis points yesterday.  This might be a sign that traders are starting to believe that the data doesn't support a Fed rate hike.  If for any reason your rate wasn't locked, today would be a good day to lock.  There's no data on Monday so my guess is trading will be relatively quiet ahead of the CPI number on Tuesday which is the last important piece of data for the Fed to consider before they announce their interest rate decision on Wednesday, the 16th.

As always, I'm happy to help in anyway I can - hopefully my blog provides you with at least some of the information you need to make decisions on locking / floating.  If you appreciate the information I provide, I would appreciate referrals for mortgages.  My company offers low rates, a wide variety of mortgage programs, and great service with our average closing time being around 3-3.5 weeks.  Contact me at 801-853-8720 or 702-812-1214 if I can help with anything.  Make it a great day and a better weekend.

Thursday, December 10, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's that time of the week:  Jobless Claims Thursday.  While jobs data is always important, especially in the eyes of the Fed which has their last FOMC meeting of 2015 next week and is analyzing every piece of data to decide whether next week is the right time to start raising the Fed Funds rate, the more important data will come tomorrow and Tuesday with Retail Sales, the Producer Price Index and the CPI on Tuesday (we also get Michigan's Consumer Sentiment Index and Business Inventories tomorrow).

Jobless Claims came in a fair amount higher than expected at 282K vs. 269K expected but the spin is that it's still quite a bit below the 300K threshold that indicates real weakness.  Import Prices came in at -.4%, higher than the expected -.8% but still low, which is good for inflation which is a big reason why the Fed might raise rates - the PPI and CPI especially will really get a close look from the Fed.  I'm not sure the data is strong enough, at least across the board to warrant an increase in the Fed Funds rate but there me be enough people who actually have a say who do want to raise the rate and will decide to do it if only because the market is expecting it.

The FNMA benchmark bond closed up yesterday by 4 basis points after trading in a tight range for most of the day.  It's is down 10 basis points as of this writing but it is 6 basis points off its low.  I would remain cautious through the Fed decision.  I would lock if you haven't already.  If something happens where traders decide to jump in to the market in a big way and push bond prices higher driving rates down, you can float down (if your lender offers that option).  Like I said over the last few days, the risk of floating and having rates move against you is much bigger than the reward you might get for what would likely be only minor improvement.

Make it a great day and contact me if I can help in any way:  801-853-8720 or 702-812-1214.

Tuesday, December 8, 2015

Mortgage Bond Market Analysis - Inching Closer to the Fed Decision

Happy Tuesday.  Three more data points that are weaker than expected.  The NFIB Business Optimism Index came in at 94.8 vs. expected of 96 and previous of 96.1.  JOLTS came in a fair amount weaker at 5.383 vs. expected of 5.525 and previous of 5.526.  Finally, IBD / TIPP Economic Optimism came in better than expected at 47.2 vs. 45.2 and previous of 45.5 but still below the benchmark 50 that would show some decent optimism.

Last Thursday, mortgage bonds sold off in a big way when Draghi didn't come through with the stimulus as promised.  This is typical of financial markets - investors / traders don't like to be surprised in a bad way and when they are, they bail.  While there is reason to keep rates where they are as far as the Fed is concerned, there is also reason to begin raising the Fed Funds rate if only to remain in line with expectations.  While we may get some buying if the Fed surprised us and stood pat, it may also cause the markets to be in turmoil with a lack of confidence in the Fed.  That said, if the data doesn't warrant an increase, then so be it, but it's not that cut and dry.  The economy isn't very strong but it is improving.  Inflation data is ticking up along with the jobs data, which is expected.  The CPI which comes out on the 15th may be the tipping point if the Fed hasn't already made up its collective mind by then.

Yesterday I wrote about the resistance levels the bond faced with the first level not being too strong but the 2nd level being a bit stronger with the 100 day moving average being at that level as well.  Add in the possibility of a Fed increase next week and prolonged buying is not likely.  Traders pushed the bond to the 2nd resistance level and ultimately it held with traders selling off in the afternoon.  The FNMA benchmark bond closed 17 basis point off its high of 103.72 (the 2nd resistance level) but it still closed up 21 basis points to close 7 basis points above the 1st resistance level.  The bond is currently down 5 basis points at 103.50.  Like yesterday, I would recommend locking to take advantage of the gains.  There is very little potential for upside movement and the risks far outweigh the reward.  There is important data coming out on Thursday and Friday and I wouldn't want to float going into that data.

Contact me at 801-853-8720 or 702-812-1214 if I can help with anything and make it a great day.

Monday, December 7, 2015

Mortgage Bond Market Analysis - Monday Edition

Happy Monday.  I hope you had a great weekend.  It's a fairly light week for data with nothing very important until we get to Thursday and Friday.  Thursday brings Jobless Claims and Import Prices and Friday we get Retail Sales, Business Inventories, Michigan Consumer Sentiment Index and, most importantly, the Producer Price Index.  The PPI along with the CPI we get on the 15th will likely weigh heavily on the Fed's decision on the 16th along with the (strong) jobs numbers from last week.

In my post on Friday I said that the charts were looking like the bond would likely trend higher throughout the day, which it did, closing up 25 basis points and getting back some of the losses from the previous days.  We get Labor Market Conditions Index and Consumer Credit Change today but this data isn't likely to have much influence on bond prices.  We have some headwind with the first level of resistance at 103.48 roughly the same as the 25 day moving average (the FNMA benchmark bond just broke through this level and is at 103.52 - we'll see if it can close above this level).  The 2nd level of resistance is even stronger at 103.72 with the 100 day moving average also being right at that level.

While the likelihood of a Fed rate hike isn't as strong as it was before Janet Yellen's comments last week, I think trader's are still very skeptical about the situation.  We will have a better idea by the end of the week and again after the CPI is released next Tuesday but waiting to lock until then is dangerous.  We've had a nice little recovery on Friday and this morning and I would take advantage of it and lock if I haven't locked yet.  Don't hesitate to contact me if I can help in anyway - 702-812-1214 or 801-853-8720.  Make it a great day.

Friday, December 4, 2015

Mortgage Bond Market Analysis - Freaky Friday Edition: The Last Day of Jobs Data

Well it's Friday and we have a bit of an anomaly happening unless you take one thing into consideration (maybe two).  Today is the 3rd and last day of the jobs data and it was all strong - there was nothing mixed about it.  Non-farm Payrolls came in at 211K vs. estimates of 196K.  October's reading was revised upward to 298K from 271K.  The Unemployment Rate stayed even at 5% as expected and the Labor Force Participation Rate went from 62.4% to 62.5%.  Average Hourly Wages came in as expected with a .2% increase and the YOY figure is at 2.3%.  This is all good news for the economy and negative for pricing yet the FNMA benchmark bond is up 10 basis points after being obliterated yesterday with a 56 basis point sell-off.  So what gives?

On the fundamental side of things, the bond market was getting close to oversold so maybe the traders thought that could make a quick trade for some profits.  More probable are some comments Janet Yellen made yesterday.  The first comment is just a "good to know" comment:  it takes about 100,000 jobs to absorb the new workers entering the workforce every month; anything over that helps to employ the unemployed, discouraged or those who had dropped out of the labor force.  The comment that may have given bond traders the impetus to do a little buying this morning in the face of this strong data was that the United States may be "close to the point at which we should be raising."  This comment doesn't feel like one that is definitive that they will start raising the Fed Funds rate; it is far more nebulous.  There are many experts who have been acting / talking as if an increase to the Fed Funds rate is a foregone conclusion.  Maybe it's not; apparently the bond traders have some renewed hope.

I would say that if you didn't lock on Tuesday when I first recommended it, or haven't locked since then, I would float at this point.  The FNMA benchmark bond is currently up 14 basis points contrary to this strong data, and it has the initial look that it may trend up during the day.  I would keep a watchful eye on the market so that you could lock quickly if needed.  If the bond does trend up during the day, I'd probably float through the weekend and see what Monday brings.  As always, contact me if I can help with anything mortgage related, including an intra-day update on the mortgage bond market to see if you should lock or float - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Thursday, December 3, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's Thursday and we are into day two of the three day jobs data period.  We have mixed data - you don't expect anything else, do you?  Here's the scoop as far as the data is concerned:  Initial Jobless Claims came in at 269K, 1K higher than the 268K expected.  Continuing Jobless Claims came in at 2,161K, 26K lower than expected - this is negative for pricing (i.e. bad for rates).  The ISM Non-manufacturing index came in at 55.9, 2.4 points lower than the expected 58.3 but still a strong showing as it is well above the 50 level which shows growth.  This is a more important index than the manufacturing side since the service sector / consumers make up 2/3 or our economy.  Factory orders were a bit hotter than expected at 1.5 vs. estimates of 1.4.

How is the bond market reacting to the data?  I'll say it again, on Tuesday I recommended that you / your clients lock ahead of the jobs data.  The FNMA benchmark bond just had a nice little run-up.  Taking advantage of those gains were ideal.  Yesterday the benchmark bond was down 28 basis points, erasing all but 2 basis points of Tuesday's gains.  Today it's down 32 basis points taking us back to November 23 pricing and erasing all of the gains from the run-up.  I reiterate the lock recommendation as more good data tomorrow will help continue the sell off.  If you lock now and rates improve dramatically (not likely considering how close we are to the 16th and what many consider a lock for the first Fed Funds Rate increase), you could float down - assuming your lender offers this option.  The RSI is now a bit closer to oversold than overbought so there is that.  Our first support level is just 11 basis points below the current level of 103.33.  All of the moving averages are above the current pricing level so the first support level is not real strong and a sell-off could snowball into something big.  The downside risk is much bigger than the potential upside reward.

Contact me if I can help in anyway - 801-853-8720 or 702-812-1214.  Make it a great day.

Wednesday, December 2, 2015

Mortgage Bond Market Analysis - Hump Day Edition

It's already Hump Day which means...we get the first bit of jobs data from jobs week.  This morning the ADP Private Payrolls Report came out and at 217K it blew away estimates of 183K.  While this doesn't always translate to good numbers in the Non-farm Payrolls or the Unemployment rate but it did last month and traders are selling on the news.  Another drag on the FNMA benchmark bond this morning is the Unit Labor Costs which shot up to 1.8% from .9%; this is, of course, inflationary and would provide reason for the Fed to raise the Funds rate.

Yesterday I recommended locking ahead of the jobs data today and with an up day of 30 basis points preceded by a 19 basis point up day, it would have been ideal to lock especially when today the bond is selling off and is currently down 24 basis points nearly wiping out all of yesterday's gains.  If you didn't follow my advice yesterday to lock, I would reiterate my stance to lock ahead of the upcoming data because I believe there is a greater likelihood of more deterioration than there is for upside gain.
For those who use me to help them with their mortgages, they can attest that the information I provided them goes far beyond advice about when to lock.  While getting a great rate means locking at the right time, not just using a lender who claims they have the best rates, there is so much more that goes in to a client's financial success and that means educating them regarding financial principals and then helping them understand the options about how the various ways of structuring their loan will impact their financial future.  I do this for my clients and would love to help you with your loan or your clients' / friends' loans.  Contact me with any mortgage-related questions at 702-812-1214 or 801-853-8720.  Make it a great day.

Tuesday, December 1, 2015

Mortgage Bond Market Analysis - December 1st Edition

Happy December.  11 Days until my wife's birthday (she'll be 29), 13 days until my daughter's (interestingly enough, she'll be 19 - just 10 years behind my wife), and 24 days until Christmas.  We are also 15 days until the Fed reveals their interest rate decision which many are prognosticating a raise / tightening.  If you read my blog yesterday, or much in the past, you know the first week of the month is Jobs week and the data we get this week will be very telling.  While the vote was 9-1 against tightening the last two Fed meetings, past actions do not guarantee future results.  The Chicago PMI was weak yesterday, below 50.  Today we get the ISM Manufacturing Index which had expectations of 50.3 and it came in at 48.6; this is the 2nd manufacturing number in as many days to come in below 50 which shows retraction.  This is a good argument for the Doves (the Fed voters who are cautious about raising rates).  Conversely, Construction Spending came in at 1.0 vs. estimates of .5.  Of the two numbers, I think the more important one for the Fed is the manufacturing number.

Yesterday the FNMA benchmark bond closed up 19 basis points and after this morning's weak manufacturing data, it is up another 14 basis points.  With two decent gains like this, I would take advantage of it and lock ahead of the employment numbers we will see over the next three days.  In addition to all of the employment numbers, we also get the ISM Non-manufacturing data on Thursday along with the ECB Policy Statement and some comments from Janet Yellen.  One important reminder regarding the employment numbers is that these all include seasonal employment for the holidays and there's no way to know how many of these workers will be able to parlay their temporary employment into permanent jobs.  Contact me if I can help with anything (801-853-8720 or 702-812-1214) and make it a great day.

Monday, November 30, 2015

Mortgage Bond Market Analysis - Monday Morning Blues

Happy Monday.  I don't have the blues but if you don't lock before the jobs data comes out later this week, you might.  If you are reading this because of the link in my email - surprise!!  There is data - just wanted to see who clicks through the link.  October Pending Home Sales missed estimates of 1.0% with an actual reading of .2%.  That pesky Chicago PMI is below 50 again with a reading of 48.7 vs. estimates of 54.  This hasn't had much impact on pricing since the real focus is on the jobs data.

Right now it seems like we are living on borrowed time with a likely hike in the Fed Funds rate coming on December 16th.  This is jobs week (like the first week of every month) and the data we get on Wednesday, Thursday and Friday (especially the last two days and especially on Friday) will tell us a lot with regard to whether it will actually happen or whether it will be pushed back until 2016.  No trader wants to be caught with their pants down, or be the last one to turn out the light or get caught holding the bag, or any other cliche that would fit.  I think they are trying to squeeze whatever profit they can out of their current strategies before they have to shift into a different methodology.  If I were a bond trader, I'd probably be shorting bonds in advance of the possible Fed move.

My guess is that if we see some good jobs numbers, we will likely see some more selling in advance of the Fed meeting which is on the 15th and 16th with the rate decision being announced on the 16th.  The RSI shows the FNMA benchmark bond is overbought and we are on our 5th day in a row of gains with the bond up 4 basis points today.  The gains have been extremely week at best with the bond up 13 basis points since last Monday's opening.  I would lock ahead of the Wednesday morning ADP private payrolls report but if you happen to float (or can't lock because you aren't in a position to lock) then it's increasingly important to lock by Thursday and then Friday with each new day bringing more important data as far as the Fed is concerned.  Rates are still really good and from a long-term perspective, will likely remain low relative to the long-term average of 30-year fixed-rate mortgages, but if you want the best rates, lock sooner rather than later.

I hope you had a great Thanksgiving weekend and that your December is awesome - can you believe tomorrow is already the first day of December?  Make today great.

Wednesday, November 25, 2015

Mortgage Bond Market Analysis - Thanksgiving Wednesday

It's the Wednesday before Thanksgiving which means a short day for the financial markets and if you are like me or most people I know, your mind will likely be on traveling, the family and friends you'll be hanging out with, the Turkey Bowl (if you play some football on Thanksgiving morning), or the great meal you'll be eating (or the nap you'll probably take after the meal).  Your mind probably won't be on work which means you probably won't be very efficient which means you'll probably take off early today if you aren't taking the entire day off - I've got an appointment at 2:00 today but other than that it's about getting the house ready and then family time when my daughter comes home from college.

But I digress.  I said in my blog yesterday how the benchmark bond was trading in a really tight range.  For the 2nd day in a row, it closed up 4 basis points and this morning it is down 3 basis points - there's probably two traders at work today and they're probably having a catered turkey lunch.

We did have a fair amount of data this morning including Jobless Claims (tomorrow is the only Thursday that isn't Jobless Claims Thursday).  Here's how it all shook out and, yes, it's mixed - go figure.  Jobless Claims came in at 260K vs. expectations of 270K.  Core PCE (Personal Consumption Expenditures) came in as expected at 1.3%.  Durable Goods Orders were 3.0% vs. expectations of 1.5%; ex-transportation they were .5% vs. .3% expected.  Personal Spending came in at .1% vs. expectations of .3% (a slight correlation to the declining consumer confidence / sentiment numbers) - October's final Consumer Sentiment reading came in at 91.3, adjusted down from the previous reading of 93.1.  Personal income also came in as expected at .4%.  Finally, October New Home Sales came in at 495K vs. expectations of 500K but well above the previous reading of 468K.  

None of this will move the market and the 1st resistance level is just 9 basis points above the current price at 103.48.  The 2nd level of resistance at 103.7 is very strong because there are also 3 moving average numbers that are at or close to this mark.  The biggest factor that is likely to keep the bonds from making any significant move upward is the growing belief that the Fed is going to start raising rates in December.  With that in mind, lock now if you have a loan closing soon or if you decide to float, lock on any good upward movement in bond prices.  The higher the rates go, the less a buyer can afford - contact me (801-853-8720 or 702-812-1214) if you would like my spreadsheet that calculates how buying power is eroded as rates increase or homes appreciate; I'm happy to share it with you.  Make it a great day and a super fantastic Thanksgiving weekend.

Tuesday, November 24, 2015

Mortgage Bond Market Analysis - Mixed Data Tuesday

Happy Tuesday (not to be confused with Happy Days which used to air on Tuesdays).  Once again we are in a tight trading range and probably will be for the foreseeable future - probably at least until jobs week in December (first week of the month) and possibly until the FOMC releases their interest rate decision on December 16th.  The mixed data today has the 1st revision of the 3rd quarter GDP revised to 2.1% from 1.5% (this will be a big influence on the Fed's decision to raise the Fed Funds rate) but Consumer Confidence for November came in at 90.4 vs. estimates of 99.5.  Overall, the GDP number is more influential than the consumer confidence number but between the low number and the geo-political happenings overseas, the mortgage bond market is getting a bit of a lift.

The FNMA benchmark bond closed up 4 basis points yesterday at 103.35 and is currently up 4 basis points to 103.39.  The RSI is now overbought so in addition to improving economic data and the increasing likelihood that the Fed will raise rates in December, we have even more headwinds.  I'm thinking that now is a good time to like and take advantage of our recent price improvement since November 10th.

Contact me if I can help in any way - 801-853-8720 or 702-812-1214.  Make it a great day.

Monday, November 23, 2015

Mortgage Bond Market Analysis - Happy Monday

It's Monday and the start of a FABULOUS week.  This is one of my favorite weeks of the year with Thanksgiving on Thursday (I think it's the only week where Thursday isn't Jobless Claims Thursday).  I love being able to spend quality time with my family - which I do about everyday - and on Thanksgiving we get to forget about the normal grind of life and concentrate on each other and yummy food.  There's always, games, football and a movie or two as well (and maybe a nap).

I was out last week with a number of projects and a couple of days of traveling but since the mortgage bonds are trading in a tight range - and trending slightly higher - I didn't think it was too big of a deal that you didn't have my blog to read (other than missing me, and an occasional joke, in general).  You can always contact me by phone for up to the minute information regarding the mortgage bond market and interest rates.

Since November 10th, the FNMA benchmark bond is 36 basis points better which means that rates are a bit better as well.  The RSI has gone from oversold to on the verge of overbought.  There is a growing sentiment that the FED will raise the Fed Funds rate in December barring some really bad data which doesn't appear likely.  If you are working with buyers it's important to educate them as to how buying power erodes as home prices appreciate and as interest rates rise.  If your buyers need something more than a theoretical discussion, feel free to contact me and I can provide you with a spreadsheet that will help give you and your buyers specifics regarding their situation.  If you are working sellers it's important for them to know that the buying population will decrease as rates and home prices increase which makes it all the more important to price their home correctly.

If I can help with anything, please contact me at 702-812-1214 or 801-853-8720.  I'll be back tomorrow with more analysis.  Make today great.

Thursday, November 12, 2015

Private Mortgage Insurance: Choices and Strategies to Help You Qualify to Buy a Home

If you are a first-time home-buyer, chances are you may wind up with an FHA loan (or  VA loan if you're a vet - but that's another story).  FHA loans have some really good features and are a great way to finance the purchase of a home.  However, conventional loans offer some good options for those who can qualify.  In order to provide you with a baseline, I will give you the elements of FHA - good and bad - so that you can compare the many options with the conventional loans and the mortgage insurance options they offer.

FHA:  One size fits all.  FHA guidelines are a little more lenient when it comes to credit issues and employment.  They are a bit stricter under their newly issued underwriting guidelines - the 4000.1 (the old 4155 is no longer in use).  Medical collections are still a non-factor, which is a good thing.  Additionally, debts that belong with assets assigned to an ex-spouse in a divorce decree also won't kill a deal if the ex-spouse decided to let the family home or car go - your credit score will definitely take a hit and you may have to pay a higher interest rate but you might still be able to get a loan.  On the mortgage insurance side of things, FHA has two elements, an up front mortgage insurance which is typically 1.75% of the base loan amount and is financed into the loan 99.99% of the time (I've had one client pay the UFMIP in cash in my 20+ years of doing mortgages).  The other part is the Annual MIP which is .85% of the base loan amount and it's paid monthly (.85% x base loan amount divided by 12).  FHA requires a 3.5% down payment which can come from a gift and rates are typically about .25% lower than conventional loans - usually, but not always.  The rates on FHA loans are not impacted by credit scores as much as conventional loans either but the higher the credit score you have, the better the rate is.  Finally, as alluded to above, FHA loans can be approved with lower credit scores, even down to the low 500s.

Conventional loans - more choices, more solutions.  Now that we have a baseline against which to compare, let's take a look at conventional loans and then we'll get to the heart of the matter, private mortgage insurance.  Conventional loans have many options for a wide variety of borrowers.

The My Community program is conventional's response to FHA and allows a borrower to finance 97% of the purchase price of a home.  With a 3% down payment requirement and no required up-front mortgage insurance, out-of-pocket expenses can be lower while also having a lower loan amount.  As mentioned previously, credit scores are much more important when it comes to getting the best interest rate AND the best mortgage insurance premium.  On this program, a credit score of 660 yields a mortgage insurance rate of .94% (9 basis points higher than FHA's) while a credit score of 700 yields a rate of .80% - 5 basis points lower than FHA's.  A 720 credit score gets a borrower a rate of .60% - a full .25% lower than FHA which roughly offsets the difference in interest rate.  Some of the difference is already offset by not having to finance the UFMIP.  Additionally, FHA requires borrowers to keep the mortgage insurance for 11 years regardless of the amount of equity where as conventional loans (including the My Community program) allow borrowers to get rid of mortgage insurance when they have paid down their balance to 80% of the purchase price regardless of how long they've had their mortgage (typically there is a two year mandate but most loans won't hit the 80% level until 5-7 years or more, depending on whether a borrower has made extra payments.  Additionally, mortgage servicers are required to cancel the mortgage insurance when the balance reaches 78% of the original purchase price.

Other conventional options include loans of 95%, 90%, 85% and 80% (or less) of the purchase price.  Each step down in loan amount (loan-to-value) yields a lower mortgage insurance premium for a given credit score.  Larger down payments mean lenders have lower risk which means mortgage insurers have lower risks which is why they can offer lower premiums.  With a 20% down payment, mortgage insurance is not required and since your loan amount will be lower, this is where you will have the lowest monthly payment since you will also get a better interest rate for a given credit score; hence, a convolution of three things - smaller loan, no mortgage insurance and better interest rate - provide the lowest monthly payment.  Since most people don't have the ability to put 20% down on their home, let's look at some mortgage insurance options that most people don't know about.

Unlike FHA which has UFMIP and one annual rate for the biggest majority of their borrowers, conventional loans offer a plethora of mortgage insurance options including, BPMI (borrower paid mortgage insurance), LPMI (lender paid mortgage insurance), Single-pay (which can either be paid by the borrower or the lender) and Split premium.  Additionally, these options have a choice of refundable (more expensive) or non-refundable (less-expensive).

Borrower Paid Mortgage Insurance:  This option is the most common one and may be the only one that most loan officers know about and offer to their clients.  With this option, the borrower pays a monthly mortgage insurance premium based on the percentage of the loan relative to the purchase price (loan-to-value) which means a $200,000 purchase price with 5% down is a 95% loan to value ($190,000 loan amount), the borrower's credit score and the minimum required coverage (this is a number derived from the automated underwriting systems - the better the credit score, the lower the coverage requirement and the better the mortgage insurance premium rate.  This mortgage insurance can be canceled when the borrower pays down the mortgage to 80% and requests cancellation from the lender and it has to be cancelled when the balance reaches 78% - this is a big advantage over FHA if the borrower is going to be in the home long enough to take advantage of this.

Lender Paid Mortgage Insurance:  This option has it's good and it's bad points.  Unlike the BPMI, lender paid mortgage insurance can never be cancelled so if you plan on being in the home for a long time (7+ years, give or take), then this is not the most cost-effective option.  Instead of having a separate mortgage insurance component in your monthly payment, the lender pays for it through a higher interest rate.  The premium rate depends on coverage and credit score but it's typically between .375% and .75%.  The advantages of this option are a lower mortgage payment compared to BPMI and a larger tax deduction since the borrower is paying more interest (consult a tax advisor for specific questions regarding tax deductibility).  For borrowers who are confident that they won't be in the home for a long time, this is a good option.

Single-pay Mortgage Insurance:  While it is very rare that a borrower will choose this option, it is a great option for those who can afford to do it.  A borrower with a 720 credit score who is putting 3% down on a My Community program would have a one-time premium of 2.18% ($4,360 on a $200,000 loan) and would not have a mortgage insurance payment which saves $100 per month for a borrower with the same credit score who opts for the monthly BPMI.  The up-front premium can be paid out of the borrower's savings or by a gift from a family member.  With a lower payment, the borrower can either qualify for a more expensive home or have a little more breathing room at the end of each month.  The up-front premium can either be refundable or non-refundable with the non-refundable being the most common and least expensive option.  For comparison purposes, a borrower with a 660 credit score would have a single-pay premium of 3.68% ($7,360) or their monthly premium would be $156.67; this really drives home the emphasis that conventional guidelines places on good credit scores.

Split-Premium Mortgage Insurance:  This option is similar to what FHA does and offers borrowers the flexibility to have a a lower monthly mortgage insurance premium by paying a portion of the premium up-front.  The borrower has a wide variety of options when it comes to a split premium since they can virtually say how much they want to pay up-front and then the monthly premium is calculated on what's left.  For a borrower with a 720 credit score who can pay 1% of the loan amount in mortgage insurance premium up front, the monthly premium would be .32% ($53.33).  An up front premium of .5% ($1,000) would yield a monthly premium of .45% or $75.  If you compare this with an FHA loan which would have an up-front premium of 1.75% ($3,500) and a monthly mortgage insurance payment of $141.67, you can see how much better the conventional option is for buyers with a good credit score.  The same scenario for a borrower with a 660 credit score would yield a monthly mortgage insurance payment of $131.67 (.79%) with an up-front premium of 1%.

As you can see, conventional mortgage insurance provides lots of options to help a borrower qualify for a mortgage based on their specific scenario.  Call me at 702-812-1214 or 801-853-8720 to find out what financing scenario is best for you or your client.  Please feel free to leave your thoughts and ideas in the comments section.  You can also email me with questions at

Friday, November 6, 2015

Mortgage Bond Market Analysis - BOOM!!!!! OUCH!!!! Edition

Rant time:  As a loan officer who has studied stocks and bonds for about 30 years (loan officer for 20+ years), it's frustrating when I advise people that they need to move quickly in terms of submitting the applications so that we can register the loan and be able to lock it.  More often than not, when people don't heed this advise, they don't get nearly they rate I originally quoted, whether it's for a refinance or a purchase, missing out on significant payment savings over their loan term.  Low rates don't mean a think if you don't lock at the right time.  Rant over.

Last Wednesday in my post I recommended locking (Tuesday I said it may be o.k. to float but to be ready to lock at a moments notice).  From last Wednesday to this morning when we got much better-than-expected Non-Farm Payrolls (I always warn that Jobs week can move the market - particularly on Friday) which is causing the FNMA benchmark bond to sell of in a big way - currently down 56 basis points - 10 more than when I took this snapshot of the bond chart (correction on my text in the chart - it was down 130 basis points, not 132):

Before last Wednesday, the bond market hadn't priced in the Fed's potential interest rate hike.  The selling that occurred last Wednesday and Thursday helped to get traders and the bond market closer to where they should be when the Fed starts their tightening.  The likelihood of a December tightening move just went up significantly when Non-farm Payrolls came in at 271K vs. estimates of 180K.  The truth of the matter is that many of these jobs are seasonal and may not turn into permanent positions but the fact is that the estimates were destroyed and this gives a lot of fuel to the fire of those who are starting to think that it's time to tighten.

The 1st support level of 103.28 has been breached with the current price at 103.22 but we could see it hover around this price point for the rest of the day or more people might get involved in the selling and we could see a bigger move down.  If it were me wondering whether I should lock or float, I'd lock and hope my lender has the option to float down in case rates improve enough to be able to do such a thing.  The 2nd support level is at 103 - 22 basis points below the current price.  The RSI (Relative Strength Index) is oversold but like I said the other day, I don't think that means much since the bias may be changing (which could be a huge understatement).

In the end, a loan officer's job is to get the loan closed.  Part of that job, though, is to help them get the best rate possible.  If a loan officer doesn't understand key financial concepts to help the borrower understand them so that they can make proper loan choices AND if they don't understand how the financial markets work so that they can provide their clients with solid educated guesses on when to lock, they are doing their clients and referral partners a great disservice.  Rant really over NOW.  As always, contact me if I can help with anything mortgage-related - 702-812-1214 or 801-853-8720.  This blog is my attempt to help with the mortgage-related item that deals with interest rates and locking or floating.  I hope it benefits you.  Make it a great day and a better weekend.

Thursday, November 5, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

Will the Fed raise the Funds rate in December or won't they - that is the question.  I'm sure there are lots of other questions that may be more interesting to you regarding sports, movies, or other aspects of your life but if you are in the process of getting a mortgage and you are wondering when to lock, the real answer was last Tuesday.  Wednesday and Thursday saw a combined drop of 74 basis points of the FNMA benchmark bond and it's being followed up by a 34 basis point drop over the last two days.  The reason is because there is so much speculation as to whether the Fed will raise the Fed Funds rate in December or wait until the 1st or 2nd FOMC meeting of 2016.  On the one hand, the last two meetings saw votes of 9-1 in favor of keeping rates the same.  If you read my blog with any regularity you know that we've had lots of mixed data with no real definitive positive direction for the economy.

Yesterday we got more data that is showing signs of a recovery with the ISM non-manufacturing index (service sector) coming in with a very strong reading of 59.1 vs. estimates of 56.5 - the service sector is about 2/3rds of our economy so this is big and the bond, which was up a bit before this data, retreated and closed down 16 basis points.  This morning we got three pieces of data that should, at the very least, provide support for the current bond price:  Initial Jobless Claims came in at 276K vs. estimates of 262K, 3rd quarter Unit Labor Costs came in much lower than the expected 2.2% at 1.4% and Non-farm Productivity was up 1.6% vs. estimates of .1%.  These last two readings are positive for keeping inflation in check but these alone are not enough to get the bonds to rally and help rates to move down.  The 10 year Treasury is on an upward trajectory and it's bringing mortgage bonds with it.  It's becoming more clear that an increasing number of bond traders think the Fed will begin raising rates in December.  If that does happen, the next big question will be by how much - .125% - .25% (a more normal move for the Fed) have both been talked about.

From a technical standpoint, the benchmark bond is at 103.63, 3 basis points below the 1st level of resistance / 100 day moving average.  The bond is not below all of our moving averages and the 1st support level is 103.28 - 35 basis points below where it is now.  While the RSI is indicating an oversold level, bond traders are probably more focused on the long bonds (10 year treasury) where the bet is for a rate hike in December.  But for some supportive data today, we may be seeing more selling on the way down to the next support level.  Like I said in my post on Tuesday, there is much more risk to the downside than there is potential for upside movement.  I would lock and play it safe.  If you are working with a lender that allows for float-downs, you might be able to take advantage of that but don't count on it.  Contact me if I can help with a pre-approval or anything else mortgage-related:  702-812-1214 or 801-853-8720.  Make it a great day.

Tuesday, November 3, 2015

Mortgage Bond Market Analysis - Tuesday Trading

Happy 2nd business day of the week.  With some slightly better-than-expected data yesterday the FNMA benchmark bond closed down one, 1, uno, un, ichi (whatever language you want) basis point.  This morning we had some data that barely missed expectations and we are down 7 basis points.  The RSI is getting really close to oversold but I'm not sure that will matter very much.  I think that the bond traders are thinking they are living on borrowed time.  The last two Fed votes came in at 9-1 in favor of leaving the Fed Funds rate unchanged yet the hawks are circling and squawking about how it's time to start raising rates.  The fact that we have been in a tight channel with a somewhat substantial downward move last week leads me to believe that traders are buying into the whispers of a Fed Funds increase in December.

In the game of musical chairs, you don't want to be the one standing when the music stops and you get the feeling that the traders are trying to maximize their profits while being able to have a seat when the music stops (Fed starts raising rates).  Certainly arguments can be made that the rate should probably stay where it is until sometime in 2016 when we hopefully see a real recovery - we see good data on occasion but some of the related data points don't back it up so it's quite nebulous at this point.  For instance, consumer confidence numbers have been quite high but consumer spending has been week.  In an economy that is truly recovering, consumers who have confidence, spend.  There are other things like this in the jobs sector as well as the building numbers.

Speaking of JOBS, it is JOBS week.  Tomorrow kicks off the jobs data with the ADP Private Payrolls report.  Thursday we get Jobless Claims, just like every week.  Friday we are blessed with Non-farm Payrolls and the Unemployment Rate.  We also get the ISM Non-manufacturing (Service Sector) Index and we get to hear from Janet Yellen tomorrow.  I would probably lock now and if the market improves, I would float down if your lender offers that option (we do).  There's more risk to the down side (and a greater likelihood of a sell-off) than there is potential for reward to the upside.  I'm here to help in any way I can.  I can be reached at 702-812-1214 or 801-853-8720.  Make it a great day.

Friday, October 30, 2015

Mortgage Bond Market Analysis - TGIF

It's Friday.  While that doesn't mean a lot for people in the real estate and lending industries since we often work nights and weekends (I was working on loan scenarios for clients until about 10:00 last night), it does mean that the mortgage bond market can take a breather from getting beat up the last two days.  Wednesday afternoon I recommended locking in advance of any further sell-off (some lenders allow clients to float down after they have locked assuming the rate has improved by a minimum amount).  The FNMA benchmark bond sold off an additional 33 basis points in addition to the 41 it sold off on Wednesday.  The total of the sell-off is equivalent to about .125% in rate AND .25 in points.  Hence, if a client was looking at a par rate of 4.25% on Tuesday, they would be looking at about 4.375% with a .25 point cost after yesterday's move.

This morning, more mixed data is out with Core PCE, Personal Spending and Personal Income all narrowly missing expectations by .1.  The Chicago PMI broke out from its previously weak readings in a big way with a 56.2 (previous readings were below 50 which is really bad as a number below 50 shows contraction).  This would normally be really bad for bond prices but with two previous days of selling and a slightly weaker-than-expected GDP number yesterday (1.5 vs. 1.6 estimates) in addition to a lower Michigan Consumer Sentiment Index (90 vs. 92.5 estimate), the benchmark bond is showing a bit of resiliency as it is up 17 basis points (GNMA up 8 basis points).  It's quite possible that we might be in the midst of a new narrow trading range - we won't know for sure until we've been in it for a number of days but the headwind is the Atlanta Fed president blustering that a rate hike is all but certain in December and the GDP is getting closer to the target rate of 2% so there could be some validity there.  On the contrary, there isn't any really strong economic data anywhere in the world.  Data is usually mixed and when it is good, it's not real strong.  A vote of 9-1 on Wednesday against a rate hike shows that 5 people have to change their mind in December for the Fed to make a move so bond traders will be looking for some definitive data to make any big moves but I think the upside is limited and there is much more risk to the downside.  Traders don't want to be the last one to leave the party since they'll be stuck with the tab.  I would lock on any positive improvement with the thought of floating down if rates improve.

That's all for now.  Hopefully the Mets can win game 3 of the World Series and turn it around.  The Utes play their annual blackout game tomorrow against Oregon State - I'll be there cheering them on with my family (look for me if you watch the game on TV - I'm in the front row of the OSU section since OSU returned some tickets; they didn't want to travel to watch their team get whooped).  Make it a great day and a better weekend.  Call me if I can help with anything mortgage related or if you want to talk sports or music - 702-812-1214 or 801-853-8720.

Wednesday, October 28, 2015

Mortgage Bond Market Analysis - Fed Decision Day

It's Hump Day but more importantly (at least for those getting mortgages), it's Fed Decision Day.  At 2:00 Eastern time, the Fed will announce whether they are going to leave the Fed Funds rate where it is or raise it.  Most of the voting members of the board are doves and if you add to that the recent weak data, I think it's unlikely that they will raise the rate; six weeks ago the vote was 9-1 in favor of leaving rates where they were.  While there is no data being released today, there is a 2 and a 5 year bond auction and depending on how they are received, we could see some movement one way or the other in the FNMA benchmark bond - the last two auctions were received well and we got some price improvement because of them.

Yesterday I wrote that even though the bond was up about 20 basis points when I finished my post, I didn't think we'd really break through the resistance levels and establish a new range.  The FNMA bond closed the day up 11 basis points at 104.61, 9 off of where it was when I finished my post and 5 basis points above the first resistance level (two below the 2nd).  We remain in a very tight trading range; looking back to October 2nd (over three and a half weeks ago) we are 19 basis points above the opening of 104.42.  Today's auctions and the Fed decision could give the market the impetus it needs to break out of the range.  Locking now wouldn't be a bad thing since rates really are great, however, I would consider taking a gamble and floating through the decision since I expect the Fed will keep rates where they are AND that the auctions will be well received like the previous two.  If you do float, be extra vigilant since bond prices can move in a hurry against you if bad things happen.
Tomorrow brings weekly jobless claims along with a 7-year treasury auction.  On Friday we get Personal Income, Personal Spending (and related items), Chicago Purchasing Managers' Index and Michigan's Consumer Sentiment Index.  I may not be available tomorrow to write about today or tomorrow morning's data but I can be reached by phone if you need to get a hold of me for mortgage information (or a pre-approval) - 702-812-1214 or 801-853-8720.  I plan to be back on Friday if I miss tomorrow.  Make today great.

Tuesday, October 27, 2015

Mortgage Bond Market Analysis - Weak Data Provides Strength for Mortgage Bonds

With October drawing to a close and the holiday (Christmas) buying season right around the corner, durable goods orders came in at a disappointing -1.2% vs. expectations for a disappointing -1.1%.  Ex-transportation, they missed the mark even more, coming in at -.4% vs. expectations of 0%.  This is a positive for mortgage bonds and is currently providing a lift as the FNMA benchmark bond is up 15 basis points at 104.65 - 2 basis points above the 2nd level of resistance.  The Case-Schiller Home Price Index came in as expected at 5.1% and is a non-factor in pricing, partly because it's based on older data.  Another bit of good news for mortgage bonds came in the form of the final October Consumer Confidence reading which came in at 97.6 vs. estimates of 102.5 and a preliminary reading of 103.00.  This is a major revision to the down side and should help push mortgage bond prices even higher.

Here's a look at the chart from about a half hour ago:

The benchmark bond is currently up 19 basis points at 104.69 - 6 basis points above the 2nd resistance level.  The RSI is slightly above the mid-point between overbought and oversold so this isn't a major factor right now.  By itself, I'm not sure that today's data is enough to break us out of the current trading range but there is some other announcements throughout this week that may lend a hand.  Tomorrow we get the Fed's interest rate decision.  I don't see them raising rates but anything can happen.  At the last FOMC meeting the vote was 9-1 in favor of keeping rates where they are and with weak data, I don't see enough voting members changing their votes in favor of an increase.  Add to our weak data the fact that the ECB, PBOC and BOJ are all doing things to try to stimulate their economies and you have no real reason for the Fed to raise the Fed Funds rate.

On Thursday we get the jobless claims numbers, just like every Thursday and on Friday we get personal spending numbers, Chicago Purchasing Manager's Index and the Michigan Consumer Sentiment Index.  By the end of the weak we will find out if we can break out of the trading range one way or the other or if we will continue to be stuck here.  I will note that being "stuck" here isn't a bad thing since rates are very low which makes it a great time to buy a home or refinance an existing mortgage.  I'm always available to assist you or someone you know with a mortgage.  Please contact me at 801-853-8720 or 702-812-1214.  A final look at the benchmark bond shows it's given up some of its gains as it's only up 10 basis points at 104.60.  Make today great.

Monday, October 26, 2015

Mortgage Bond Market Analysis - Monday Morning QB

It's Monday and it's football season so it's time for fans to play Monday morning quarterback.  The University of Utah's quarterback had a bad game against USC which cost the Utes the victory.  He threw three meaningful interceptions (4 in total) with two of those either being returned for a touchdown or inside the 10 yard line giving our defense little chance to do anything.  USC played a better game than we did and pulled off the upset.  All is not lost and as long as we get back on our horse and ride, we can still have a great season.

As for the Mortgage bond market, the FNMA benchmark bond has capitulated in a very narrow range over the last 7 days and has been unable to break through the 104.56 and 104.63 resistance levels with any strength in order to make a solid move up.  Contrarily, the support level of 104.3 has held firm as well.  This means that rates remain wonderfully low as bond traders look for cues to buy with conviction and push prices higher and rates lower or to sell and exit the ride.  For now the RSI is a little above the half way mark between oversold and overbought and the bond is 5 basis points off its morning high at 104.5.

There is a bit of economic data this week including September New Home Sales today which came in at 468K, much weaker than the expected 550K; this is a bit contrary to the NAHB Sentiment Index which came in at 64 last week (very strong) vs. estimates of 62.  Next week will be data heavy with the three jobs reports:  ADP Private Payrolls on Wednesday, Jobless Claims on Thursday and Non-farm Payrolls on Friday.  There's a lot of other data in addition to those.  Last week the ECB, PBOC and BOJ (three key central banks) all continued or added to their stance of stimulating their economies.  With this in mind and the likelihood for mixed data and no data that shows a strong recovery, I anticipate bond prices to continue to trade in a tight range for the near future.  Like last week, I would lock for closings within 15 days and float for closings beyond the 15 day mark.  As always, if you choose to float, make sure to keep a close eye on the market so that you can lock quickly of the market moves against you.  Remember that the market is a live, heavily traded market so prices and rates fluctuate throughout the day.  On a bad day, we can lose .25 - .375% in rate and on a good day we can pick up about the same (down is more common than up as investors are cautious when setting rates).  Reading my posts each morning will help (reading them in the morning is best so that you have time during the day to lock if that's what you decide to do) but using a loan officer who follows the market closely will help insure that you lock at the right time, or at least at a good time.  Offering great rates like Noble Home Loans is a great start to getting a good rate on your mortgage but locking at the right time is just as important.  If I can help you or a client in any way, please contact me at 702-812-1214 or 801-853-8720.  Make it a great day and a better week.

On a final note, the World Series begins this week and the Mets make their every 1.5 decade appearance against the KC Royals.  Go Mets.

Tuesday, October 20, 2015

Mortgage Bond Market Analysis - Little data and it's mixed.

Happy Tuesday.  The Mets are up 2-0 in their 7 game National League Championship Series with the Cubs (game 3 is tonight - go Mets) and the University of Utah Utes are 6-0 and ranked #3 in the AP poll with 16 first place votes and #3 in the College Football Power Index - this is the kind of data I like, and it's not mixed.  Conversely, the NAHM Home Builder's Sentiment Index came in at 64 yesterday vs. estimates of 62 (this is a 10 year high).  This isn't a big factor in pricing and neither is Housing Starts which came in at 1206K vs. estimates of 1150K or the contrarian data of building permits that came in low at 1103K vs. estimates of 1170K - this is a precursor for housing starts.  This is all of the data for today and there is no data tomorrow so traders are looking for the next big news that will provide them with direction.

For now, the 1st resistance level at 104.56 has proven to be strong with a couple of attempts to break through getting beaten down.  The RSI is closer to oversold than over bought so that's a good thing and the support level of 104.3 is fairly strong so I would expect to see the FNMA benchmark bond trade in a very narrow range until some important economic data or a big geo-political even breaks us out of the narrow range we are in.

Thursday brings us the European Central Bank policy statement which could have an impact on bonds as well as the weekly jobless claims data.  Additionally, we get Leading Economic Indicators as well as Existing Home Sales.  The benchmark bond closed up 12 basis points yesterday at 104.54 - 2 basis points below the 1st resistance level.  This morning, the bond is down 15 basis points and based on today's chart, I would guess that the bond will finish somewhere around where it's trading right now.  I would float with caution and be ready to lock if there is a quick move to the downside.  Call me if I can help with anything mortgage related at 702-812-1214 or 801-853-8720.  Make it a great day and go Mets.

Thursday, October 15, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's the day of reckoning for the New York Mets who play the final game of a 5 game series with the Los Angeles Dodgers in LA.  If they win, they advance to the National League Championship Series to play the Cubs (who would have bet on that matchup at the beginning of the season?) for the right to play in the World Series.  But the purpose of this post is really to talk about more exciting things like economic data, mortgage bonds and interest rates.

Getting to the data, I have to ask:  would you really be surprised if I told you the data is mixed?  Surprise - it's mixed.  Initial Jobless Claims came in better than expected at 255K vs. consensus expectations of 269K.  The CPI was also a bit better than expected with the headline number coming in exactly as expected at -.2% and the core CPI coming in at .2% vs. expectations of .1%.  The real disappointing news came from the manufacturing side where the NY Empire Manufacturing Index with a consensus estimate of -7.4% came in at -11.36%.  The Philly Fed Manufacturing Survey had expectations of -1 but the reality was -4.5.  These numbers will help to support the current pricing.

From a technical perspective, at 104.48, the FNMA benchmark bond is currently below both levels of resistance which are currently 104.56 and 104.63 respectively.  The bond is down 13 basis points for the day which is 8 basis points off its low and 18 basis points above the 1st support level.  The RSI isn't a factor right now with the current level just above the midline - smack dab (a highly technical term) between the overbought and oversold thresholds.  Tomorrow will bring us Industrial Production, Capacity Utilization, and the Michigan Consumer Sentiment Index in addition to the JOLTS report.  Locking now would take advantage of the nice +33 point day we had yesterday and safeguard against anymore downside.  I don't expect earth-shattering numbers tomorrow so floating isn't a bad idea as long as you keep a close eye on the market and are ready to lock at a moment's notice if the market moves strongly against you.

I'm available to help you or a client with anything mortgage-related - 801-853-8720 or 702-812-1214.  Make it a great day.

Wednesday, October 14, 2015

Mortgage Bond Market Analysis - Hump Day + Data

It's been a quiet week so far with the holiday on Monday and no data to speak of yesterday.  This morning brought us some more important data with September Retail Sales coming in at .1% vs. estimates of .2%, ex-autos, it's -.3% vs. estimates of -.1%.  September Headline PPI is -.5% vs. estimates of -.3% and Core PPI is -.3% vs. estimates of .1%.  These are all misses on data that the Fed monitors closely.  Remember that retail sales is about 2/3s of our economy and it's not very strong (hence our recover is not very strong).  Weak retail sales means that there isn't a lot of demand for most products and thus the CPI is likely to stay low which means over all inflation will remain low with no real need to raise the Fed Funds Rate (unless they want to create the illusion of a stronger recover in the hopes that people will think the economy is good and they can start spending money - this strategy definitely has some big risks).  With little consumer demand, there is no need for companies to ramp up manufacturing which is why the PPI is staying low since demand for raw materials isn't strong.  Following in line with this is the last bit of data we got today with August Business Inventories coming in at 0% vs. estimates of .1% - this isn't a big factor in pricing but it makes sense give the other data.

From a technical standpoint, we are coming off a four day losing streak but the FNMA benchmark bond only lost 28 basis points over that time.  The RSI is hovering just above the mid-point which means it's a bit closer to overbought than oversold but it's not a factor at this level.  The bond is currently up 20 basis points at 104.48, 9 basis points above the 1st level of resistance and 8 basis points below the 2nd level of resistance.

Lot's of data tomorrow:  It's Thursday so that means Jobless Claims but we also get the CPI along with the NY Empire Manufacturing Index and the Philly Fed Manufacturing Survey.  All of this data could impact interest rates.  I look for the CPI to be weak again, expectations are for -.1% vs. previous of .2%.  Both manufacturing numbers are expected to be weak but not as bad as the previous reading.  If you or a client have a loan closing within 15 days, I'd take advantage of these great rates and the bump we are seeing today and lock.  Otherwise I might roll the dice on tomorrow's data and see if we get further improvement.  Watch the market closely if you do float so that you can act quick and lock in ahead of a reprice for the worse in case the data surprises to the upside.  Make it a great day and feel free to call me if I can help with anything mortgage related:  702-812-1214 or 801-853-8720.

Friday, October 9, 2015

Mortgage Bond Market Analysis - Princess Bride edition

Happy Friday.  It's the first day of the Mets' playoff series and the 2nd game of the season for the Rangers (hockey) who got off on the right foot at Chicago on Wednesday with a win.  But I digress.  After all, we have a big weekend of college and NFL football (go Utes - beat Cal).  Of course, the real important stuff is what is going on with mortgage bonds and interest rates.  September Import Prices were -.1% which is good as far as inflation is concerned but this figure was better than the expected -.4% so that's not good.  The other piece of economic data to be released this morning was August Wholesale Inventories (old data) which came in at .1% vs. estimates of 0.  This is a slight negative for bond prices but is somewhat offset by the older July data which was updated to -.3% from -.1%.

After closing down 10 basis points yesterday at 104.37, the FNMA benchmark bond is down 2 basis points to 104.35 - the new 1st level of resistance is 104.39 with the 1st support level still at 104.25.  Both yesterday and this morning the benchmark bond has tested the support and it has held - every time the support (or resistance) is tested and holds, it gets stronger (kind of like lifting weights).  The bond is 10 basis points of its lows and is trending slightly upward since the data release.  If it continues, it could close the day in the green.

I'll be out of town through Tuesday and won't have any internet access to speak of but I will have my phone so feel free to call me if I can help with anything.  Monday is a holiday and the bond market is closed and the only data on Tuesday is NFIB Business Optimism Index - not a big market mover.  The rest of the week has some decent data with the Producer and Consumer Price Indices, Business Inventories, Michigan Consumer Sentiment Index, Philly Fed Manufacturing Survey, Industrial Production and the JOLTS Report in addition to the Fed Beige Book.

Finally, a very interesting quote from the FOMC Minutes that were released yesterday:  "The time to tighten is here...BUT it is appropriate to wait at this time."  WOW.  I'm not making this stuff up.  If the time to tighten is here, then tighten.  If it is appropriate to wait at this time then the time to tighten really isn't here.  I think they are confused.  It reminds me of a scene from one of my favorite movies, The Princess Bride.

For those of you who want a little action seen to kick off your weekend, here's the great sword fight scene.

Call me if I can help with anything - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Thursday, October 8, 2015

Mortgage Bond Market Analysis - "Weird" Addition.

What in the heck is going on in the world?  You know it's weird when the Chicago Cubs are in the playoffs.  It's even weirder when they also win a game.  Add to this the fact that the New York Mets are also in the playoffs and you have one very rare year.  The chemistry or karma has got to be at an all-time unexplainable weirdness level but I don't think it will have any impact on the mortgage bond market unless a key trader is a big fan of either team and then maybe if his or her team wins, he or she gets all giddy like a little school girl and makes some weird trades.  Doubt that will happen but this is a unique year for baseball.

As for the mortgage bond market, I recommended floating with caution (that's how I recommend floating) yesterday in the morning when the bond was down as low as 21 basis points.  It ended the day a bit better, only down 9 basis points.  After being up as much as 9 basis points this morning, some stronger-than-expected jobless claims data put the breaks on the buying and the FNMA benchmark bond is now up 1 basis point and the 10-year treasury is at 2.07 - an important level.  If the treasury breaks through this level then bond traders could sell off mortgage bonds pushing prices lower and rates higher.  I don't expect much volatility until the FOMC minutes are released and digested.  In fact, I'd be surprised if much happened after that since it was a 9-1 vote to keep rates the same.  If there is some hidden gem in the minutes that lead traders to believe there may be a different result in the FOMC meeting at the end of the month, then that may cause some consternation and some selling.

There is a lot of resistance above the current level for the benchmark bond as the RSI is overbought and the 1st level of resistance is 11 basis points above the current price.  There is more room for a drop with the 1st level of support 23 basis points below the current price and the 200 day moving average at about 104.18 - 7 basis points below the support level.  I don't think there is a big possibility for a large upward movement in price (which would lower rates) today - barring any geo-political occurrence and while it's not great, I think there is a greater likelihood of selling based on the technicals so my recommendation would be to lock.  Please feel free to contact me if I can help in any way - 702-812-1214 or 801-853-8720.  Make it a great day and go Mets (their first playoff game is tomorrow night).

Wednesday, October 7, 2015

Mortgage Bond Market Analysis - Hump Day Edition

Well it's Hump Day (don't know why I like to capitalize it because it's not really an official day) which means we are just three days away from another big college football weekend with ESPN College Game Day broadcasting from the campus of my alma mater with my beloved #5 Utes playing Cal at 8:00 p.m. on Saturday night on ESPN.  Gotta love the big time.

As for interest rates and mortgage bonds, I recommended locking on Monday morning which would have been a good thing if you followed my advice.  The FNMA benchmark bond closed down 20 basis points on Monday.  Yesterday it bounced back a tad, closing up 9 basis points on no economic data to speak of.  This morning in an absence of data, the bond was down as much as 21 basis points at 104.35 and is currently trading at 104.39, down 17 basis points.  The RSI is hovering around overbought and the 1st level of resistance at 104.59 has proven to be strong.

Support levels are at 104.25 for the 1st level and about 104.18 for the 200 day moving average.  Tomorrow, like every Thursday, we get the jobless claims numbers.  At about 2:00 pm EDT the FOMC minutes will be released which will give us a better insight as to the Fed's thought process at the last meeting when they decided to keep rates where they were and it may help traders get a feel for what the Fed is thinking for the next meeting at the end of October; we are 3 weeks away from another FOMC meeting.  Friday has a couple of data points that may have a slight impact on bond prices but I don't expect moves to be really big unless there is some major global happenings which would typically be beneficial for interest rates as investors would move to the safety of bonds.

Locking at this point is not a bad idea since you never really know what's going to happen when the FOMC minutes are released though I don't expect much from this batch.  Rates are still great as well.  After a net sell-off since Monday of about 29 basis points based on the current pricing with the bond down 18 basis points right now, it is probably o.k. to float as long as you are paying close attention to the market - I'm always available to help out with that:  801-853-8720 or 702-812-1214.  Make it a great day and a better weekend.

Monday, October 5, 2015

Mortgage Bond Market Analysis - Monday Morning Mash-up

It's Monday after a 5-day winning streak for the FNMA Benchmark bond.  After closing the week up 81 basis points from last Monday's open (about .125% in rate AND .3 points in favor of borrowers), you might suspect that bond traders might want to take a little money off the table.  The RSI started the week quite overbought and has since come down to just slightly overbought with a sell-off of 15 basis points.  At 104.52, the benchmark bond is now 7 basis points below the 1st level of resistance but still well above the 1st level of support (104.25) and the 200 day moving average (around 104.15).

Economic data today was a bit mixed (surprise, surprise) with the September ISM (non-manufacturing) index coming in at 56.9 vs. expectations of 57.7.  This is a miss to the down side but still a strong reading and the Employment Index (a subcomponent of the ISM non-manufacturing data) jumped from August's 56 to 58.3.  This is important since the Fed is watching all employment data very closely (with the possible exception of the Labor Force Participation rate which remains at its lowest level in 38 years).

There is a smattering of data that will be released this week but the most anticipated item will probably be the Fed minutes that will be released on Thursday.  This could possibly be a market mover as traders will be looking into the details to try to get an indication of when the Fed will start raising rates.  That said, the vote not to do anything was 9-1 at the last meeting and if we are being honest with ourselves, the job market isn't as good as some would have us believe, inflation is well below the target rate of 2% and most data just doesn't support an increase in the near future.  However, the Fed may surprise us and decide to raise rates in an attempt to get us to start believing the economy really is heating up to spur us to act like it is heating up which could help get the economy to heat up.  After such a nice run-up last week, I'd probably lock in my gains.  If you want to float, do so with caution and watch the market closely so that you can lock quickly if the market takes a nose dive.

TRID is in effect.  The new Truth-in-lending RESPA Integrated Disclosure is in effect as of Saturday and will impact the time line of a closing until we all have a handle on how they will play out.  45 day contracts should be the norm for buyers who need a mortgage to buy their homes.  I doubt closings will actually take 45 days but there are new waiting periods so it's better to be safe than sorry.  One tip to help make the process a bit more efficient is for the Realtor to not only name the escrow officer and company but to actually provide their full contact information so that we can get their fees and give them ours as soon as we get the file.  Another thing to look for is either the use of 45 day locks which will mean slightly higher rates / fees or if the buyer insists on a 30 day lock, they will probably have to wait until about 15 days into the loan process before that will be available.  Again, this is all very fluid since it is all very new to us and the title companies, the investors we sell loans to and us are all going to work through this as best we can.  I'm always available to help with mortgage questions or pre-approvals for your clients - 702-812-1214 or 801-853-8720.

On a lighter note, the University of Utah Utes are now ranked 5th in the AP poll, 7th in the Coaches' Poll and 1st in the ESPN Power Rankings.  ESPN College Game Day will be at the University of Utah this week and they will be televising our game against Cal on Saturday night at 8:00 p.m. MST.  What a great opportunity.  Go Utes.  Make it a great day and a better week.

Thursday, October 1, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

Happy Jobless Claims Thursday.  The data this morning has started out on the weak side for the most part with initial jobless claims coming in at 277K vs. estimates of 270K and previous of 267K.  Continuing claims came in at their lowest level in 15 years at 2.191mil vs. estimates of 2.236mil and previous of 2.244mil - this reading is negative for bonds but the Challenger Job cuts were much higher than expected at 58,877 vs. estimates of 41,186.  Just got the data for August construction spending which came in a bit higher than expected at .7% vs. estimates of .5% but the more important data as far as mortgage bonds and interest rates are concerned is the September ISM Manufacturing Index which came in at 50.2 vs. estimates of 50.6.  While it still shows growth, it is the 3rd straight month of slowing growth.  

After closing up 11 basis points yesterday at 104.36, the FNMA benchmark bond is up 17 basis points at 104.53 which is its high for the day and it's also the 4th day in a row it is up.  I recommended floating (always with a close eye on the market so that you can act quickly) unless you have a loan closing in the very near future then lock and take advantage of the recent gains.  A last quick look at the charts shows the benchmark bond up 11 basis points like before but it just shed 10 basis points from its high after a quick recent spike.  At its current level, it is well above the 200 day moving average and it is also 11 basis points above the 1st resistance level of 104.36 but 12 basis points below the 2nd resistance level of 104.59.  Interest rates are great and locking now wouldn't be a bad thing as traders may decide to take some profits but I would still float VERY cautiously to see if we can get more weak data tomorrow to help continue the rally.

I'll be without cell service or internet connection for most of the rest of today and through Sunday, possibly Monday.  We are still available to help you with anything mortgage related; Brad Malking, owner and top-producer of Noble Home Loans is available to help with rate questions and pre-approvals - 702-869-8790.  Make it a great day and a strong finish to your week.  I'll leave you with this inspirational message:  go out and be the best.