Mortgage Bond Market Analysis - National Letter of Intent Signing Day edition

It's a big day for us college football fans as high school and junior college football players from around the country fax in their letters of intent to play for the college of their choice.  It's a big reward for their hard work to be able to attend college with a full-ride scholarship and learn lots of things, on and off the field, that will prepare them to go pro - usually in fields other than football.

Today is also a big day for the mortgage bond market as it's the first of three straight days that has some type of employment report.  The ADP Private Payroll Report is the first report of the three days and it came in at 213K vs. expectations of 225K and previous of 253K.  This would typically be good for rates but it's still above 200K and that's kind of a weak line of demarcation.  The ISM Non-manufacturing index came in at 56.7 which was .2 above the expected number of 56.5 which was the same as the previous month's reading.  Remember that anything over 50 shows growth / expansion.  Here is a snapshot of the chart:

There's a couple of things to keep in mind.  First, at current levels, the benchmark bond (FNMA) is just slightly above the 1st level of support with the 2nd level 56 basis points below that.  Secondly, the RSI is no longer reading overbought which is a good thing from a technical standpoint.

Tomorrow's schedule:  There are a few economic data points scheduled for release tomorrow but the big one is the weekly initial jobless claims.  It's expected that they will come in at 290K vs. previous of 265K.  A reading of 290K or higher might help put an end to our current losing streak - of course the equities market along with other geo-political events will have a say in the matter as well.  Yesterday I recommended that you lock and since that recommendation the market has gotten worse by about .125% in rate.  If it were me, I'd still lock today ahead of tomorrow's data just to be safe.  Please feel free to contact me if I can help with anything mortgage-related - 702-812-1214.  Make it a great day.