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Monday, February 23, 2015

Mortgage Bond Market Analysis - Monday morning edition

It's Monday morning and even though the weather's a bit overcast, the sun is shining on the mortgage bond market this morning.  It's not real bright or anything but we did get some disappointing numbers when existing home sales came in -4.9% from the previous month at 4.82 vs. expectations of 4.95 and previous of 5.07.  The experts are explaining away some of the drop to limited inventory - which probably has some merit since lower inventory means fewer choices for home buyers.

The RSI (Relative Strength Index) is just above oversold and the price of the benchmark bond is just a bit below the 1st level of support - which is really acting like a resistance level at this point.  All else being equal, we are probably a bit more likely to see improvement in the bond market (good for rates) than deterioration.  Here's the chart:

Contrary to what the economic calendar said last week, tomorrow we have a number of items that may impact the financial markets.  Data includes, Case-Schiller, Richmond Fed Manufacturing Index, and Consumer Confidence.  Perhaps even more important than these data points is what Mario Draghi (ECB President) and Janet Yellin (Fed President) will say.  The amount we are up this morning is roughly offsetting the amount the bond market lost from Friday morning's highs.  We continue to channel in a relatively narrow range while investors look for some definitive direction at which point we'll either get the benefit of some good bond buying or we'll get smacked with another sell-off.  Feel free to contact me if I can help with anything mortgage-related.  Make it a great day.

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