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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.

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