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.
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