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Friday, January 30, 2015

Mortgage Bond Market Analysis - TGIF and last business day of the month edition

Well TGIF - I love my weekends.  Well surprise, surprise.  We have more conflicting economic data.  I've personally been amazed at how there are so many data points that either contradict each other or just flat out show no consistency with regard to economic growth.  Yesterday we had an about face with the jobless claims numbers coming in very low which means people are getting jobs (or not filing claims for some reason) yet retail sales numbers and the CPI have been low in spite of lower unemployment - you would think that more people with jobs would mean more people with money which would mean more people buying more stuff.  The various consumer confidence / sentiment numbers have all been off the charts lately and you would think that would mean they feel like spending but it's all about the jobs.  If people aren't spending, why are companies hiring?

This morning, GDP was reported at 2.6 - SLOW growth - vs. estimates of 3 and previous of 5.  The Fed will have no reason to raise rates anytime in the near future with the GDP that low and absolutely no signs of inflation.  If people aren't buying, there won't be inflation, hence the low CPI numbers.  The Chicago PMI came in at 59.4 vs. estimates of 58 and previous of 58.3 - that's a strong number but we aren't seeing this translate down the line with the consumers.  Somewhere the train is getting derailed.  My theory is that many consumers aren't consuming, or are only consuming the things they need, because as they get their new jobs, they are just trying to get caught up on bills and they may want to make sure they have some longevity on their job with some savings before they become more liberal with their wallet - or at least the contents thereof.  Here's a snapshot of the mortgage bond market this morning:

The RSI shot up today and is now at an overbought reading.  The FNMA benchmark mortgage bond is currently 4 basis points below the 2nd level of resistance.  Rates are great for people who got an FHA mortgage last year to refinance since they will also benefit from the 50 basis point reduction in the annual mortgage insurance rate.  If you have a loan in process and you are floating, why not take advantage of the recent gains in the bond market and lock in this low rates?

On Tap for Monday:  ISM manufacturing along with personal income and personal spending will be released.  None of these are typically important as far as driving interest rates.

Make it a great weekend.  Who are you rooting for in the Superbowl?  I don't care a heck of a lot either way, I just hope the commercials are good; I know the food's going to be delicious.  Feel free to call me if I can help with a refinance or a purchase mortgage:  702-812-1214.

Thursday, January 29, 2015

Mortgage Bond Market Analysis - Holy Jobless Claims, Batman!!

We received quite the surprise on the jobless claims front this morning.  After two consecutive weeks with readings up over 300K and expectations for 301K jobless claims this week, those who are hoping for economic growth (as opposed to lower interest rates) got a pleasant surprise when claims came in much lower than expected at 265K.  Initially it knocked bonds off their perch but not as much as one might have thought; the initial drop was only about 20 basis points.  This positive surprise was tempered by the disappointing pending home sales numbers that were expected to come in at +.5% and missed the target in a big way with the actual number at -3.7%.

As of this writing (different from the chart you'll see), the FNMA benchmark bond is right in the middle of the day's trading range at 102.98 - 10 basis points off both the high and the low and 2 basis points below the 1st level of resistance.  From a technical perspective, the RSI is a bit closer to oversold than overbought which is good for those hoping for lower rates.  Here's a snapshot of the chart:

A little different perspective:  I haven't written about this in a while so with good jobless claims numbers this morning and the economy seemingly on a slow uptrend, I feel like now is a good time to give a little perspective about interest rates in general.  For those who are looking to refinance their current mortgage or are thinking about buying a home, the lower the interest rates the better.  The problem with that is that typically we see low interest rates when the economy is bad.  When the economy is healthy and the unemployment rate is generally where it should be along with the GDP, CPI and PPI, interest rates are typically in the 6-7ish percent range.  For those that have salaried jobs, it may not be as important how the economy is doing and lower rates - at least while they are buying or refinancing - is the goal.  For those who are in the real estate and mortgage industries, we should want the economy humming along so that more people could have jobs that allow them to qualify to buy homes.

As the impact on our economy, and more importantly the impact on investors' decisions, becomes more influenced by the global economy and world events, it is possible to have a decent local (national) economy and have relatively low interest rates.  However, our exports aren't as strong as they could be if the rest of the world's economy is in the crapper.  As far as I'm concerned, I'm hoping for growth in jobs which means more people can buy more stuff which means the GDP improves along with all of the other related data - especially things like pending home sales - but it also means that rates will likely rise as the investors will switch to equity investments from bonds to try to keep pace with inflation.

What's for dinner tomorrow?  As an appetizer we will get the GDP with Chicago PMI for the main course and for desert there is the Reuter's University of Michigan Consumer Sentiment Index - which caused the huge drop in bond prices and a big bump to rates two weeks ago.  You may want to lock ahead of this data release - just to be safe.  Please call me if I can help with a refinance or a purchase mortgage:  702-812-1214.  Make it a great day.

Wednesday, January 28, 2015

Mortgage Bond Market Analysis - No Data Hump Day edition

Happy Hump Day!!  There is no economic data this morning although we will get the Fed Funds rate decision at about 11:15 PST.  I expect this rate decision itself to be a non-factor.  The more important information will come in any comments by any of the Fed big wigs regarding their bias and when they may possibly begin raising rates.  I think the consensus is for sometime later this year although there is a Fed president or two who thinks that they should wait until next year to start raising rates.

Yesterday was an anomaly for rates with bonds selling off in spite of some mostly disappointing data and a sharp down day in the stock market due to disappointing earnings.  The benchmark bond a some capitulations yesterday as it mostly trended down from the morning highs, closing at -1 basis point on the day for the FNMA benchmark bond.  This morning, the equity markets are off their morning highs and are hovering right around even for the day.  Here's the morning's snapshot of the benchmark bond:

The RSI is around 50 which means that there is no innate buy or sell pressure from a technical perspective.  The FNMA benchmark bond is just below the 1st level of resistance and I think investors are being a bit cautious ahead of tomorrow's jobless claims numbers.  The expectations are for 301K initial claims (it would be the 3rd consecutive week above 300K after about 12 weeks below that level).  Pending home sales numbers are also released tomorrow at 7:00 a.m. PST and they are also expected to come in lower than last month.  If the claims numbers come in higher and home sales come in lower, that would be good for rates.  Roll the dice and float if you want but I always like to be safe in advance of announcements like this and lock.

FHA's annual mortgage insurance lowered by 50 basis points (.50%) - As of Monday, January 26th, FHA lowered their annual mortgage insurance rate from 1.35% to .85% on FHA loans above 95% loan to value.  If you or someone you know has an FHA loan with the old mortgage insurance rate, please have them call me to how much money they can save by refinancing - 702-812-1214.

If you want to make sure you get this information everyday (or at least every day I write this report - which is typically at least 3 days per week) then subscribe to my blog or like my business facebook page - The Wunderli Team.  Feel free to contact me if I can help with a purchase or refinance mortgage - 702-812-1214.

Tuesday, January 27, 2015

Mortgage Bond Market Analysis - I'm Back

My internet has been restored which means the excitement of the gory details of the bond market can be uncovered in my posts.  Like your favorite sport or tv show when it comes back in season - my post is back and you can rest easy - even if the bond market isn't.  This morning we have another disconnect in the market:  the Conference Board's Consumer confidence reading blew away expectations of 95 with a 102.9 vs. previous month's of 92.6 so you would think that CONSUMERS with all of this confidence they have would CONSUME.  But you would be wrong!!  Here's the disconnect:  Durable Goods orders came in at -3.4 vs. expectations of +.5 and previous of -2.1.  If you take transportation out of the equation, it came in -.8 vs. expectations of +.6 and previous of -1.3.  This is madness, madness I say.  Where is all of the consumption?  How can consumers say they are so confident and then not consume?

My answer to this question is that I think they are confident that jobs are coming back (the last two weeks of jobless claims came in north of the 300 threshold so whatever) and the new jobs will then translate into better durable goods numbers and CPI, etc.  On January 16th when the FNMA benchmark bond tumbled 92 basis points, it was driven by the Michigan Consumer Sentiment Index that came in 4.6 points above expectations at 98.2 yet today's consumer confidence reading isn't having nearly the same impact.  Maybe it's the "Fool me once, shame on you, fool me twice shame on me" phenomena that is at play here.  At any rate, the benchmark bond, while 10 basis points off the morning high, is up 22 basis points this morning.  Here's a snapshot of the chart:

You know what tomorrow is.  Most importantly, it's hump day - YEAH!!  It is also the day we get the Fed interest rate decision.  I don't expect anything to happen with this.  Based on previous comments from various Fed talking heads, they won't start raising rates until much later in the year and there are a few that don't think they should raise rates until 2016.  Keep in mind that the Fed Funds rate is an overnight (extremely short-term) rate and doesn't move mortgage rates in and of itself.  What an increase to this rate does do is signify to investors that the economy is improving and there may be inflation on the horizon - bonds aren't good when inflation is present because it eats away at the return here as stocks typically go along for the ride.  Investors typically sell of bonds which drives prices down and interest rates up, right along with the Fed Funds rate.  It's like magic.

As always, I'm here to help in anyway I can, even if it's only to provide a ray of sunshine to your morning.  If you want to provide a ray of sunshine to my morning, feel free to refer your next client who needs a mortgage to me; I can be reached at 702-812-1214.  For now, I'd float with caution and, as always, be judicious in watching the market (which translates into - if your not using me for your client's mortgage, you need to hope the loan officer who is handling the transaction follows the mortgage bond market like I do) and be ready to lock quickly if things change.  Make it a great day.

Thursday, January 22, 2015

Mortgage Bond Market Analysis - Another Chartless Edition

Happy Thursday morning and I must apologize for being chartless again - I know it's not a pretty sight but such is the case when all I have is my small laptop screen to work with which doesn't allow me to take a proper snapshot of that beautiful chartless babe which is the mortgage bond market (TIC).  Hopefully I'll have a hot sexy graph for you tomorrow - assuming I'm alive after going flying in my buddy's new airplane.

As far as economic data is concerned, the weekly jobless claims were weak, coming in at 307K vs. expectations of 300K.  The bigger story is what is coming out of Europe where the ECB (European Central Bank) kept rates the same but announced an expanded asset purchase program including the purchase (investment) of up to 60 billion euros per month in order to stimulate growth and counter deflationary pressures.  This is 10 billion more than originally thought.

The benchmark FNMA bond was at 102.05 (it's low for the day and down 35 basis points on the day) when Draghi (president of the ECB) made the announcement.  Over the next 45 minutes the bond climbed 52 basis points to reach its high for the day at 102.57.  It has since sold off a bit and is now at even (102.40).

On tap for tomorrow we have leading economic indicators and existing home sales.  Should you / your clients lock?  It is a great day to lock and rates are still great even though we have seen a drop in bond prices of 102 basis points since 1/16 which equates to about .25% in rate over the last 6 days.  Please feel free to contact me at 702-812-1214 if I can help you with anything mortgage-related.  Make today great.

Wednesday, January 21, 2015

Mortgage Bond Market Analysis - No chart edition

Happy Hump Day - does Wednesday still get that designation on weeks with a Monday holiday?  Well if you were to look at yesterday's chart you would notice that the benchmark bond trended down from 10:50 on.  This morning, after mixed data from the housing market, the benchmark bond is down 10 basis points.  Housing starts came in well above expectations at 1089 vs. expectations of 1040 and greater than previous month's of 1043.  On the other hand, building permits came in at 1032 vs. expectations of 1058 and previous of 1052.

This mixed bag of data is still good and is pushing bond prices lower resulting in slightly higher rates.  Tomorrow's big data point is weekly jobless claims and expectations are for 300K - last week's expectations missed in a big way.  Please feel free to call me if I can help with anything - 702-812-1214.  Make today great.

Tuesday, January 20, 2015

Mortgage Bond Market Analysis - Post holiday edition

Happy Tuesday morning.  It should be at least for those who may be considering locking a conventional loan.  The benchmark FNMA 3.0 bond is up 36 basis points after the significant beatdown it took on Friday.  It is 9 basis points off its high and 4 basis points below the 1st level of resistance.  The GNMA bond is lagging behind - only up 8 basis points as of this writing.

My economic calendar must have had a glitch on Friday because I believe I reported that there was no data until Wednesday or Thursday.  There was some data today but it's not important relative to pricing.  The NAHB Housing Market Index came in at 57 vs. expectations of 58 - anything over 50 shows growth.  Here's a snapshot of the mortgage bond chart:

On tab for this week:  This is just a quick report today since I need to get on the road up to Salt Lake.  I'll try to get a report or two out while I'm up there but I met not be able to write one until I get back on Friday.  For now, rates are great and I would feel good about locking.  Tomorrow we have Housing Starts and Building Permits, both of which are expected to come in higher than last month.  Remember that Thursday brings the jobless claims numbers and we may see more layoffs of the temporary seasonal workers but we also may get a surprise to the upside.  Me being conservative as I am, I'd lock ahead of this report.

At any rate (pun always intended), make it a great day and a great week and please feel free to contact me (702-812-1214) if I can help in any way with a mortgage, pre-approval or whatever.

Friday, January 16, 2015

Mortgage Bond Market Analysis - Mirror edition

TGIF.  It's been quite the week, mostly for personal reasons.  My family has been waiting for yesterday to come for a couple of months.  My daughter applied to go to the University of Utah in mid-November and has been on pins and needles wondering if she would be accepted - until yesterday when the letter came letting her know that she has been accepted.  She was as excited as could be and is now progressing through the steps to get ready to be a student there in the fall.  But I digress, proud father as I am.

Yesterday also brought a very strong up day in the market with the FNMA benchmark bond climbing 73 basis points.  This morning, with no strong economic data and a stock market that isn't doing much either, the benchmark bonds - both FNMA and GNMA - are selling off in a big way with the FNMA down 69 and the GNMA down 80 (more than it was up yesterday).  The CPI (ex-food and energy) came in below expectations (+.1) at 0.0.  The CPI including food and energy came in at -.4.  This is non-inflationary and one would think that this would be good for bonds since it means the economy isn't exactly lighting the world on fire.  Additionally, bond are thought to be a good safe investment in times with little inflation whereas investors tend to want to invest in stocks when inflation is more prevalent because they want an investment that will keep up with inflation.

Not to say "I told you so" but if you read my posts on a regular basis you know that I recommend locking on big up days and have recommended locking to take advantage of the recent run-up; I often say "don't be greedy."  I have also said that even with a big down day like we are having today, there's no reason to panic or feel like you've missed out if you hadn't locked because rates are still great.  Here is the chart:

What's on tap for next week?  Monday's a holiday and the week is extremely light on the data front - the only thing I see on the schedule is the jobless claims numbers on Thursday so investors will look to the stock market and the global economy for direction.  I will be in Salt Lake City on business so may not be able to write my regular posts.  Please feel free to contact me at 702-812-1214 if I can help with anything mortgage-related and don't forget to like The Wunderli Team facebook page to get intraday updates on interest rates as well as other mortgage news.  Make it a great weekend.

Thursday, January 15, 2015

Mortgage Bond Market Analysis - Jobless Claims edition

There's a fair amount of economic data that was released and the results are a mixed bag as far as the mortgage bond market trading is concerned.  I'll start with the good data:  the Producer Price Index (PPI) ex-food and energy as supposed to be somewhere between -.1 and +.2 and it came it at +.3 - this is negative for pricing; the offset to this is that when including the volatile food and ENERGY sectors, it was down -.3 (mostly thanks to tanking oil prices) vs. estimates of -.1 to +.1.  The big negative that was released today came in the form of weekly (weak) jobless claims numbers which checked in at 316K - well above the estimates of 293K.  This is the first time in about three months that it has been above 300K.

In my post yesterday I shared my hunch that the jobless claims number may surprise to the upside (300K+) due to possible layoffs for seasonal employees.  The fact that the number is where it is shows that employment probably isn't as strong as we would like to hope it is and we found out yesterday that consumer confidence isn't translating into actual spending - just yet, anyway.  All of this means that investors may continue to prop up bonds which will keep interest rates low.  Of course we are also benefiting from a week economy in Europe and around the globe, extremely low oil prices and stock market analysts hinting at a correction.  Here's the mortgage bond chart:

The RSI is still showing overbought which means the bias hasn't changed and the indicators are calculating the possibility of a sell-off due to the huge run-up.  The first major support level is about 60 basis points below where we sit right now which is a significant drop should the investors decide to take some profits.  If enough investors sell off big, the smaller investors follow which could really drive prices down and interest rates up but with everything going on in the economic universe, we may be safe for a little while with only minor (relatively speaking) fluctuations.  Even a big drop would still allow borrowers to lock in great rates; that said, why not take advantage of where we are at and lock now?

On the schedule for tomorrow we have Consumer Price Index, Industrial Production, Capacity Utilization, and the most popular consumer sentiment index - the University of Michigan's.  I don't anticipate any of these data points surprising big or impacting the market in a big way so if you want to float, I'd do so with caution and be ready to lock quickly just in case.

Please subscribe and "like" my facebook page - The Wunderli Team - so that you can get intraday commentary (when I write it) as well as keep up to date on new mortgage programs and guideline changes.

Wednesday, January 14, 2015

Mortgage Bond Market Analysis - Holy Bad Retail Sales, Batman

Happy HUMP Day.  My recommendation yesterday was to float with caution - especially for those who aren't closing on their loans until 15 or more days.  If you floated, you were rewarded - if you locked, you got a great rate so no worries.  Yesterday morning we got some consumer confidence numbers that were very strong and over the last 3 months or so we've been getting strong numbers from the various consumer confidence readings.  What is really interesting to me is that when we get the retail sales numbers, they have been disappointing which says there is a disconnect between consumer confidence and actually acting on that confidence by spending their hard earned money.  Maybe they're confidence is increasing that they will soon be able to get a job and then be able to spend money or that the job they have will be "permanent" so that they can release the hounds at some point and go on a spending spree.

The retail sales numbers came in at -.9 vs. expected of 0 and previous of +.4 (what happened to December - Christmas must have been a good month for coal and not so good for toys and things).  Ex-autos, the numbers were even worse:  -1.0 vs. expectations of .1 and previous of .1.  While the FNMA benchmark bond is 14 basis points off its morning high, it is currently up 54 basis points as I write this.  The RSI is still overbought so the bias hasn't changed which means there is a decent chance of a sell-off by investors for some profit-taking.  Currently, the benchmark bond is 32 basis points ABOVE the 2nd level of resistance.  Here's this morning's chart:

Where are we at and what's on tap for tomorrow?  My chart can go back 1.5 years so I checked out the prices over that time period and the benchmark bond is well above its high for that time frame.  Rates are unbelievable so I would recommend locking now, especially in advance of tomorrow's weekly jobless claims numbers which could easily wipe out some or all of today's gains.  Expectations are for 293K vs. previous week's claims of 294K.  Anything under 300K is good.  Here's the question in the back of my head:  Is this the week we see a bump in the weekly jobless claims due to layoffs of temporary seasonal employees?  If so, the bond market could get another boost tomorrow so floating would be rewarded again.  I'm just more conservative when it comes to that and like to lock in some great gains and be happy with what I've got.  It's up to you if you have a loan or a client with a loan and decide to roll the dice - even a huge down day tomorrow will still yield some awesome rates.

If you like the content I provide,  please subscribe to my blog and "like" The Wunderli Team facebook page for intraday updates and other mortgage-related news.  Feel free to call me if I can help with anything mortgage-related - like a refinance or purchase-money loan for you or a client, friend or family member - 702-812-1214.  Make it a GREAT day.

Tuesday, January 13, 2015

Mortgage Bond Market Analysis - Earnings Season Has Begun

Happy Tuesday and welcome to the start of earnings season.  After a great national championship game last night where Urban Meyer's Ohio State Buckeyes ran all over the Oregon Ducks, it's time to get back to reality and talk about the mortgage bond market.  There was little economic news to sink our teeth into but the two releases in consumer and business confidence came in higher than expected.  Additionally, the JOLTS number came in at 4.972 vs. 4.85 expected.  On the one hand, these numbers aren't important enough to have much of an impact on the bond market but on the other hand, confidence in the economy from consumers and businesses is negative for pricing (which translates into the possibility of investors selling off and rates increasing).

Earnings season is here. Every quarter, earnings season is kicked off with Alcoa's earnings announcement and the results were good which sent the stock market up strongly.  In spite of the confidence in the equity market, the benchmark bonds are not selling off like they typically would on a big up day in the stock market.  The FNMA benchmark bond has been positive and negative today but is at 0 right now while the GNMA benchmark bond is up 24 basis points as of this writing.  Here's this morning's chart:

On the docket for tomorrow is business inventories, retail sales and import prices.  These could have a slight impact on the market but the more important data releases will come on Thursday with the weekly jobless claims numbers in addition to the PPI and the Philly Fed Manufacturing survey.  There's more data on Friday but we'll address that later in the week.  As for now.  I'd lock if my loan was closing within 15 days and float with caution if it's closing between 15 and 30 days from now.

Please feel free to contact me if I can help with anything mortgage related - 702-812-1214.  If you want to make sure that you are staying current with what's going on in the interest rate market (AKA the mortgage bond market) then like The Wunderli Team facebook page or subscribe to the blog (I sometimes provide intraday updates on my facebook page).  Make it a great day.

Monday, January 12, 2015

Mortgage Bond Market Analysis - College Football Championship edition, eh hem, Monday Morning No Economic Data edition.

Happy Monday and YES, the day is finally here.  Today is the day of the first college football national championship game under the new 4 team playoff format.  Tonight at 5:30 PST we will see what amounts to college football's version of the Superbowl when Oregon and Ohio State play each other in the inaugural National Championship Game .  But I digress.  I doubt this is having any impact on the benchmark bonds or the stock market but Nike is the sponsor for both Oregon and OSU (Nike is a huge funder of Oregon athletics since they are right in Oregon's back yard - Phil Knight is a big-time booster) and may see some increased sales with a resulting tick up in their stock.  Who knows?

What we do know is that in spite of no economic data being released, the investors keep trading and today they are more confident in buying the GNMA benchmark bond than the FNMA benchmark since the GNMA is up 22 basis points while the FNMA is currently flat.  Oil prices are dragging the stock market down a bit this morning and providing a bit of a bid to the bond market.  Here's the chart:

The FNMA benchmark bond is 22 basis points off its low and 11 basis points off its high.  The RSI (Relative Strength Indicator) is above the overbought threshold which means that traders may decide it's time to sell and take some profits.  The price is 2 basis points below the 2nd level of resistance and 37 basis points above the 1st level of resistance which is currently more of a support level and means it's easier to go down than up at this point.  That said, weakness in the price of oil along with other misses on data points last week may keep investors engaged.

What's up on the economic data calendar?  Tomorrow is another very light day for data with the NFIB Business Optimism Index and the IBD/TIPP Optimism Index (a consumer measure).  Wednesday and Thursday will bring some data points with a bit more substance.  For now, I'd float with caution on any loan closing 15-30 days out and I would lock for loans closing in 15 days or less.  Please contact me (702-812-1214) if I can help with anything mortgage related.  In the meantime, make today great.

Friday, January 9, 2015

Mortgage Bond Market Analysis - Anomaly Friday

What's going on in the market is a bit weird and I would describe it as an anomaly and it's not just one weird thing today, it's two.  First off, usually when the stock market goes up, the bond market goes down because money usually flows from one into the other.  For instance, if the stock market looks attractive like there are some buying opportunities, investors will sell bonds (driving prices down) and buy stocks (driving prices up) and vice versa.  Secondly, when good news, REALLY good news comes out regarding the economy, bonds almost always sell off.  None of this is happening this morning - at least for the most part.

We got really good news on the employment front and there was a bit of a sell-off.  Here's how this morning's FNMA benchmark bond pricing has gone:  Just after trading started the bond was at 102.07.  Within 30 minutes it was up to 102.5 - a 43 basis point swing.  Then the news hit that non-farm payrolls came in at 252K vs. estimates of 240K and November's numbers were adjusted up significantly to 353K.  Additionally, the unemployment rate which was estimated to go down to 5.7 from 5.8% came in at 5.6%.  Great numbers like this would typically trigger a big sell-off, and it did.  Over the next 15 minutes the FNMA benchmark bond sold off 38 basis points and another 12 basis points (50 bps total) over the next 50 minutes.  It's what happened after that that is interesting:  it rebounded in the face of this strong economic data and went back up 38 basis points over the next hour and ten minutes and has since retreated a bit.  Wholesale inventories were just released and they came in at .8 vs. expectations of .3 and previous of .4.  While this would normally have a negative impact on bond pricing, the trend continues to be bucked as the benchmark bond has clawed it's way back up to 102.37 - up 28 basis points on the day. 

I think that once investors had the opportunity to digest the data, they remembered that these include the holiday hires and we won't have true numbers until February.  They probably also remembered that the price of oil is very low (relatively speaking) and that the European economy is on life support - literally.  Mortgage bonds are definitely a great safe haven at the moment.  Here is a look at the chart as of about 7:30 PST:  

Should I lock?  This is always a great question and the simple answer is that rates are great and you really can't go wrong if you lock now.  From a technical perspective, the benchmark bond (FNMA) is overbought which means investors could decide to sell off and take some profits.  With an increasing amount of good economic news, there is also a better likelihood of bond prices moving lower which will drive rates higher.  That said, there are offsets like low oil prices and a crappy European economy.  If you have a loan closing in the next 15 days, I would lock, otherwise, it's probably o.k. to float.

What's on the Docket for Monday?  There is NO economic news scheduled for release on Monday which means the market will trade on today's news and try to anticipate what will happen later in the week.  Tuesday doesn't have much data being released but we see a bit of news coming out on Wednesday and a number of items on Thursday.  I can be reached at 702-812-1214 if I can help you with anything mortgage-related.  Make it a great day.

Thursday, January 8, 2015

Mortgage Bond Market Analysis - I Wish I Locked on Tuesday edition

There are a number of things driving the market this morning and they are pushing the benchmark bonds lower resulting in higher rates.  If you read my blog much you know that I always recommend locking ahead of any kind of jobs data since good data in this area means a sell-off for bonds which moves rates higher.  The fact that we had a nice strong run-up before the data should have made everyone content with locking rates knowing that they got some of the lowest rates available over the last year which have been as low as they've been in history.

If you or a client has a loan and you haven't locked yet, you saw the FNMA 3.0 benchmark bond fall 28 basis points yesterday and the GNMA 3.0 benchmark fall 54 basis points.  This morning the weekly jobless claims numbers came in slightly worse than expected at 294 vs. 290 but it's still below 300 which shows stability and strength in the economy.  Pair that with yesterday's ADP Private Payroll numbers, stabilization in oil, remarks from Chicago Fed president yesterday afternoon that the Fed may not raise rates until next year and the thought (based on comments from the ECB President Draghi) that the ECB will soon begin some measure of quantitative easing by buying sovereign bonds and you have a recipe for the bulls - at least in the equity market.  On these things, the equity market is up sharply today following a nice move up yesterday and when this happens it's usually money shifting from the bond market (investors selling bonds, driving bond prices down and rates up) and buying equities (stocks).  Here's this morning's chart:

I believe that I said it in my blog yesterday and I'll say it again that rates are fantastic.  I would have no qualms about locking today to take advantage of how good they are as well as trying to get ahead of some more potential sell off tomorrow if we get good non-farm payroll numbers which I suspect we will.  There is a caveat regarding the employment numbers we have seen this week and that is that these numbers are still seasonal, meaning that they include temporary workers hired for the holiday season and nobody knows how many of them will be offered permanent positions.  We won't know the real numbers until next month but for now, perception is reality.

On docket for tomorrow:  As you may have gleaned, tomorrow is a big day for economic data.  We have non-farm payrolls which aren't expected to be as strong as last month by a long shot but the expectation is still for 245K new jobs which is decent.  We also get the unemployment rate which is expected to go down to 5.7 from 5.8% and we get wholesale inventories which are expected to be a little lighter than last month at .3 vs. .4.  Please feel free to call me if I can help with anything mortgage-related:  702-812-1214.  Please share and subscribe to my blog and "Like" The Wunderli Team facebook page so that you can get any intraday and end-of-day updates I write (which won't be on my blog) along with news regarding mortgage programs.  Make today great.

Wednesday, January 7, 2015

Mortgage Bond Market Analysis - Happy Hump Day (first one of the year)

All good things must come to an end.  I don't know who said that and I don't necessarily believe it - my marriage won't come to an end but that's another topic for another time.  "Good" is also a matter of perspective.  Here's the deal:  we've had a really nice run over the last couple of weeks in the mortgage bond market but today we received some surprisingly strong numbers in the ADP Private Payroll Report - 241 vs. expected of 226 and last month's numbers were revised upward by 19K.  This is good for the economy - more jobs means more people can afford to buy homes, cars, and many other consumer products which creates more jobs for others.  However, as the economy strengthens, interest rates necessarily increase so as to keep it from growing too fast which would cause inflation.  The Fed's target rate for inflation is about 2% - we have been below that for a while and interest rates have been necessarily low to help the economy grow.

With the strong ADP numbers this morning, investors / traders act like giddy school girls after their first kiss and sell their "safe" bond investments to get cash to move into more growth-oriented equity investments.  Hence the sell-off this morning.  The downside to this good economic news is that as the bonds sell off, interest rates, which move inversely to bond price, increase so those people who are in the process of buying a house and haven't locked their rate will be looking at higher rates if the sell-off continues.  Currently the benchmark FNMA bond is down 25 basis points so that's really no big deal especially since rates are extremely low in the first place.  However, it is important to be reminded how everything fits together and to know that we've got more employment-related data coming out this week that could be the impetus for further sell-off and even higher rates.  Here's this morning's chart:

From a technical standpoint, the benchmark bond is still overbought.  Even with economic news that isn't that great, we could experience some more sell-off which would be nothing more than investors taking some profits off the table.  It's important to remember that in addition to our economic data, there are other things that drive rates such as geopolitical events as well as the economic news from around the world and lately that news from China and Europe has not been very good which has been one of the factors in the recent run-up in the bond market.

Tomorrow we get the weekly Jobless Claims numbers.  With strong numbers from ADP this morning, I would expect that we will have more good news tomorrow.  It doesn't always work this way but I'm conservative and think it's better to be safe than sorry (in most cases).  I would lock today (although the GNMA bond is underperforming the FNMA bond so it's taking a bigger hit so the impact for rates is greater for FHA and VA).  Low oil prices are helping to keep bond prices low in addition to the weak economies around the world so even some good jobs number on our side of the pond might not be too bad for rates.  Many days I will provide an update or two regarding the bond market on my facebook business page so you may want to like The Wunderli Team page to make sure you stay up on what's happening.  Please feel free to share your thoughts in the comments section and call me if I can help in any way regarding a mortgage - 702-812-1214.

Tuesday, January 6, 2015

Mortgage Bond Market Analysis - I Was Wondering When This Would Happen

It finally happened.  After a big run-up over the last 7 days for the FNMA 3.5 bond, the benchmark shifted to the FNMA 3.0 (for conventional loans).  With some weaker-than-expected data this morning, the new benchmark bond is up strong in early morning trading.  It is currently 11 basis points of its high and is currently 7 basis points below the 2nd level of resistance (102.50) at 102.43 but is still up 36 basis points on the morning.  The RSI (Relative Strength Indicator) is now showing that the bond is overbought and with another big move up today, my guess is that traders / investors are going to be looking for any hint of economic news that surprises to the good side to take some profits off the table - and they may not wait for that.

The FNMA 3.00 is up 198 basis points since it's opening price on Christmas eve - that's about .5% in rate (theoretically) which is HUGE.  As to what's driving it this morning, the ISM non-manufacturing index came in much weaker than expected (58.5) at 56.2 vs. last month's reading of 59.3.  Any reading over 50 is still expansionary and means the economy is growing.  Factory Orders also disappointed with a reading of -.7 which was below expectations of -.4 and identical to last month's reading.  Here's this morning's chart:

Where do we go from here?  That's always anybody's guess.  Statistics show that the first two trading days in January are the best indicator for what the stock market will do the rest of the year.  When the market has closed higher after the first two days of the year it has finished the year up 95% of the time with an average gain of 10+%.  When it's lower after the first two trading days, as in this case, it has only finished the year up 51% of the time with an average gain of under 3%.  Many analysts and experts are calling for a 10-15% correction sometime this year while some are forecasting a bear market.  Some say that certain indicators show it has either just begun or will soon.  What this means for the bond market is potentially higher prices and even lower rates since most investors will park the money they had in equities in the safe haven of bonds.  This is all very fluid and speculative so it's very important to keep a sharp eye on the charts.  Rates are fantastic right now and whether you locked yesterday or waited till today or will wait until tomorrow, you are going to have an excellent rate.

Economic Calendar:  On the docket for tomorrow we have the ADP Private Payroll Change with expectations of 225 vs. previous of 208.  The Trade Balance numbers are expected to come in at -41.8 vs. previous of -43.4.  Finally at around 11:00 tomorrow morning we will get the FOMC minutes from last month's meeting.  Thursday and Friday have some big data points so look for the updated schedule tomorrow.  A last look at the benchmark bond before I sign off shows it at 102.35, up 28 basis points and 19 basis points off its high.  Please feel free to contact me if I can help you in any way with a mortgage - 702-812-1214.  I'd also love to get your thoughts in the comments section.  Please like, share and subscribe and like The Wunderli Team facebook page so that you don't miss out on any intraday updates as well as updates regarding new mortgage programs and other related news.  Make today GREAT!!

Monday, January 5, 2015

Mortgage Bond Market Analysis - Back to Life edition

Happy Monday Morning and welcome back to normal life.  Schools back in session and the holidays are officially over.  It's the first Monday of the new year and time to ramp up the efforts to make this year a better year than last year.  After a nice rally in the mortgage bond market last week, it continues this week with commodity (oil) stocks dragging down the broad market stock indexes and driving a flight to safety / quality.  There is no data out this morning but Total Car Sales numbers will be released this afternoon at 1:00 PST.

The benchmark FNMA bond is currently up 33 basis points at 104.89 - 19 basis points above the 2nd level of resistance.  The RSI (relative strength indicator) is bumping its head against the overbought threshold but it's not there yet.  An analyst from CITI came out with a note regarding crude oil where he dropped his target price for crude oil to $63 per barrel from $80.  He said there were three "massive" factors for this:  1) US shale revolution, 2) Saudi refusal to cede market share to other producers and 3) a weak world economy.  The equity markets are currently down about 1% which is almost always good for bonds and it definitely is in this case.  Here's a look at this morning's chart:

Prices have improved a bit since I took a snapshot of the chart.  It's a great time to lock and take advantage of the gains that we've seen over the last 7 days.  We may see more upward movement in prices (which is good for rates) but we could also very well see some profit taking with the 114 basis point run in the last week based on the chart.  I always try to error on the conservative side when it comes to locking and one of my mantras is "Don't be greedy."  If you lock in a rate now, you may not get the absolute lowest rate (but you might) but you will love your rate over the course of your loan.

New feature in my blog this year:  In order to add even more value to the reader (Realtors / borrowers), I will be finishing my posts with what's on the economic calendar for the next day.  Up tomorrow morning is ISM Non-Manufacturing (service) which is expected to come in at 58.5 (below last month's 59.3 but anything above 50 shows growth and strength in the economy).  Additionally, Factory Orders are expected to come in at -.4 which is weak but would be an improvement over last month's reading of -.7.  Finally we get the IBD/TIPP economic optimism index - this isn't a big thing but the trend is up and last month's reading was 48.4.

Please feel free to share your thoughts in the comments section.  To make sure you get this information every morning (at least on the mornings I write it) you can either subscribe to my blog or you can like The Wunderli Team facebook page.  Please feel free to call me if I can help you or a client / friend with a mortgage:  702-812-1214.  Make it a great day, week, month and year.

Friday, January 2, 2015

Mortgage Bond Market Analysis - Happy New Year addition

Happy New Year and I hope you have an amazing 2015!!  The mortgage bond market closed 2014 with a nice 5 day rally and is starting off 2015 on a good note - currently up 23 basis points - thanks to some economic data that came in below expectations (although still strong).  The ISM manufacturing index came in at 55.5 (anything above 50 shows growth) which was below expectations of 57.6 and last month's reading of 58.7.  Construction spending was also disappointing with a reading of -.3 vs. expectations of +.3 and previous of +1.2.

In general, I expect rates to trend up this year for a number of reasons, most importantly due to an improving economy which will entice investors to move from the safe haven of bonds to more growth-oriented investments like stocks.  Additionally, experts are saying that there will likely be growth in the home-buying market as millenials decide to purchase homes and with more homeowners having equity in their homes, the move-up market is also likely to increase.  This increase mortgage demand will have an upward influence on rates as well.  Finally, the Fed has stated that they intend to begin increasing the Fed Funds rate later this year which, while it's a short term (overnight) rate, will influence a rise in rates.  Here's today's chart:

If you have a loan closing within 30 days, I would take advantage of the fantastic rates right now.  Bond prices are as high as they've been in quite a while so we could see some profit taking which would be bad for rates.

My goal this year is to write these posts a minimum of two times a week with a preference of 3-5 times per week.  If you want to stay up on what rates are doing and why, please subscribe to my blog and feel free to share it with friends, associates, clients, etc.  I also welcome any input you may want to share in the comments section.  If I can help you or a client with a mortgage, I would be honored - 702-812-1214.  Make 2015 the best year of your life.