Mortgage Bond Market Analysis - Happy Monday

Another day, another mixed bag of economic data.  So why is the "positive" data winning the day?  First of all, lets review the results.  Core PCE was up .1% vs. expectations of .2% - a slight miss but up nonetheless.  Personal spending was -.2% vs. expectations of -.1% - another slight miss.  January personal income was up .3% vs. expectations of .4% - yet another slight miss but also still up.  January construction spending was up .3% vs. expectations of .2%.  The biggie, The ISM manufacturing index came in at 52.9 vs. expectations of 53 - a slight miss but it still shows growth vs. the previous month (any reading over 50 is growth).  The focus for the traders is on the ISM and when that reading came out, the traders began selling a bit and pushing the benchmark bond past the previous morning low.

After a decent gain last Monday, we've been in a relatively tight channel since then and I don't think we are going to break out of it today unless the investors decide that they want to sell off ahead of more potentially damning news - we have some very important data releases this week remember.  Here's a snapshot of the chart I took right after it started selling off a bit:

 
If you look at the daily chart in the top right corner you will notice the trend is down and that the current price is below the previous low.  This could mean a downward trend for the day; the first level of support is 27 points below the current price on this chart so it could potentially drop a bit and break us out of the channel we are in - this, of course, would not be good.

The rest of the week brings a lot more data, just like the first week of every month does.  The key points to keep an eye on are the ADP private payroll report on Wednesday (which also brings the ISM non-manufacturing index), initial jobless claims are Thursday - just like every week, and Friday we get non-farm payrolls and the unemployment rate.  These are all important and each of them could impact the mortgage bond market for better or for worse.  If you are going to float your interest rate into any of these reports, keep a close eye on the release so that you can act quickly if necessary.

If you want the occasional intraday updates that I provide on my facebook page, please like The Wunderli Team page.  Please contact me if I can help you with a mortgage or if you have questions about the mortgage bond market / interest rates - 702-812-1214.  Make it a great day and a better week.