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Friday, April 24, 2015

Mortgage Bond Market Analysis - TGIF edition

The Durable Goods numbers were a mixed bag...what else is new?  In total, durable goods came in at .4 vs. consensus estimates at .8 so that was disappointing (albeit much better than the previous reading of -1.4).  The numbers ex-transportation were much better at 4.0 vs. estimates of .4 and previous of -.4.  One would think that this would drive traders to sell but their focus was likely more on the overall number which was disappointing.

Currently the benchmark bond is up 27 basis points at 102.37, 9 basis points off the high for the morning.  The RSI is above the 50 mark so it's closer to overbought than oversold.  At the current price, the bond is 6 basis points above the first level of resistance and 24 basis points below the 2nd level of resistance.  I would feel great about locking now for any loans closing in the next 15 days and I would float (always with caution) for loans closing beyond 15 days.

Feel free to contact me if I can help with anything mortgage related:  702-812-1214.  Make it a great day and a better weekend.

Thursday, April 23, 2015

Mortgage Bond Market Analysis - Initial Jobless Claims Thursday

Like every Thursday, Initial Jobless Claims were released today.  The number came in at 295K which was a bit higher than expected and than the previous month.  Adding to the consternation is the weak new home sales number which came in at 481K vs. expectations of 523 and previous of 543.  I really think that traders are on edge right now wondering what to do.  For the most part we've had a lot of mixed economic data with some important readings showing weakness and a few others data points providing some glimmers of hope.  However, since April 1st we have traded in a rather narrow range of about 57 basis points over the last 17 trading days, including today.

The RSI is closer to oversold which could indicate a possible movement upward in bond prices as traders decide bonds are a good buy right now.  Contrarily, every time it looks like we might get a little traction, the economy gives us a good bit of news and traders sell, like yesterday.  Long term it's easy to think that the economy will recover in such a manner that traders start selling bonds like we've been thinking they would for the last several months and rates will go up to something that's more indicative of a healthy economy - around 6ish percent.  For now, traders are playing the guessing game trying to figure out when that's going to happen.  Here's a snapshot of this morning's chart:

Devoid of economic data that is consistently good or bad, bond traders are at the whims of the daily winds.  They are likely basing their decisions on technical analysis as well as what they think the data readings will be and how the Fed might react to that (though the part about the Fed is a little longer term proposition).  The next FOMC meeting in May might be the next time we get any real direction.  In the short term, I'd look at locking on any buying in the bond market for loans closing 15- 30 days out and if you have a loan closing within the next 15 days, I'd lock today.  I'm not blowing smoke when I say that rates are really good.  Please feel free to contact me if I can help with anything mortgage-related - 702-812-1214.  Make today great.

Wednesday, April 22, 2015

Mortgage Bond Market Analysis - Hump Day edition

It's another Hump Day edition of the Mortgage Bond Market Analysis.  After weak data in the housing market last week, we got a surprise to the upside which was kind of expected, which makes it not so much of a surprise.  At any rate, existing home sales came in at 5.19 vs. expectations of 5.05 and previous of 4.89 and existing home sale change came in at 6.1 vs. 3.0.  These numbers are giving traders the impetus to sell bonds which is pushing rates higher.

From a technical standpoint, the RSI is just below the midpoint between overbought and over sold so that's not a big factor.  The FNMA benchmark bond is currently at 102.15 which is three basis points above the first level of support.  So far the bond has bounced off of this support level twice this morning.  If it holds and we get some week initial jobless claims data tomorrow, that could entice traders to buy back in and push rates lower.  In any case, rates are still very low and I could see more sell off since we are still at the upper end of our range for the last few months.  If you want to be safe, I'd lock ahead of tomorrow's data release, otherwise, roll the dice and see what happens.  Here's a snapshot of the mortgage bond chart from this morning:

In addition to the jobless claims numbers, the new home sales numbers are out tomorrow and they are expected to come in lower than last month.  Friday will bring us the durable goods numbers and that's it - a light week as far as economic data.  If jobless claims are above 300K tomorrow, we will most likely see some buying; the consensus estimates are for 288K, 6k less than last week's 294K.  I'd lock just to be safe.

Make it a great day and feel free to call me if I can help with anything mortgage-related - 702-812-1214.

Thursday, April 16, 2015

Mortgage Bond Market Analysis - Happy Thursday edition

It's Thursday which means Initial Jobless Claims.  There's also some more data points and all of them came in weaker than expected.  Initial jobless claims were 294K vs. forecasts of 280K - a decent sized miss but below the pain threshold of 300k (albeit not much).  March housing starts missed in a big way with the actual reading of 926K missing the forecasts of 1.045K by 119K.  Building permits also had a big miss of 51K, coming in at 1.030K vs estimates of 1.081K.

With such big misses across the board you would probably expect bond traders to be doing the happy dance and buying in a big way but you would be wrong.  Normally this might be the case but with some pretty solid resistance and the benchmark due for some profit taking after 4 consecutive days of decent gains after a more prolonged period of overall increases, traders are taking a breather and some profits with a bit of selling.  The 2nd level of resistance at 102.63 has proven to be pretty strong since April 1st.  Over the last 12 trading days, including today, this resistance level has proven strong enough to beat down any attempts to break through like the proverbial red-headed stepchild.

The benchmark bond is currently down 16 basis points at 102.42 which is 9 basis points off the morning lows and 2 basis points above the 1st level of resistance which is acting more like a support level at this time.

On the schedule for tomorrow is the CPI, Michigan Consumer Sentiment Index and Leading Economic Indicators.  Weak readings from these data points in addition to the fact that the RSI is a bit closer to oversold than overbought might provide more impetus for some buying.  It's your call - you can be safe and lock today before the data is released or you can roll the dice and float.  Let me know if I can help with anything mortgage-related:  702-812-1214.  Make it a great day.

Wednesday, April 15, 2015

Mortgage Bond Market Analysis - Hump Day, hopefully in more ways than one.

It's hump day and I'm hoping that means I'm over the hump of being sick.  I've missed the last few days of writing this blog due to being under the weather thanks to incessant winds driving horrible allergies and leading to sickness.  It's really bad in the Las Vegas valley.  

Good Wednesday am (Do you know what day it is, what day it is),
Weak data all around. Empire Manufacturing contracted to -1.19 vs. 6.9 prior (consensus 7.17) for the second negative reading in the past two years. New Orders contracted significantly at -6.0 for the second straight monthly decline. Industrial production decreased -0.6% in March (consensus -0.3%) following a +0.1% gain in February. Capacity Utilization for March fell to 78.4% (consensus 78.6%) and February was revised up from 78.9% to 79.0%. Treasury prices are higher this morning (lower yields) after today’s data posted below market expectations across the board but the 10yr is still not breaking through that strong line of resistance at 1.86. Currently we are sitting at 1.88 and mortgage bonds are +15bps on the day. A close below 1.86 will be needed for pricing to improve much more (I think we have tested it 6 or so times).  
One bright spot from the NHBA is that Home builders reversed their one month decline in sentiment as the April NAHB/Wells Fargo Housing Market Index increased 4 points to 56 from a one-point downwardly revised 52 in March. The bounce back up to the January-February average suggests the March observation was an outliner.
Fannie Mae has announced the HomePath Ready Buyer program, qualifying first-time homebuyers to receive up to three percent of the purchase price in closing cost assistance toward the purchase of a HomePath property, upon completion of an online homebuyer education course. On a $150,000 home, this could result in up to $4,500 in savings for the buyer. In addition, Fannie Mae will reimburse the $75 cost of the homebuyer education course at the time of closing.
“Purchasing your first home can be an overwhelming process,” said Jay Ryan, vice president of REO sales for Fannie Mae. “We developed the HomePath Ready Buyer program to provide first-time homebuyers with the knowledge to make informed decisions as they navigate the complexities of the homebuying process. Closing cost assistance provides a cushion many first-time buyers need to more confidently face the financial responsibilities of homeownership.”
Fannie Mae has partnered with Framework, a non-profit created by the Housing Partnership Network and the Minnesota Homeownership Center, to offer homebuyers a homeownership education course that covers both the complexities of home buying and the responsibilities of owning a home. The course contains nine, 30-minute sessions and is conducted entirely online.
To be eligible for the closing cost assistance and the reimbursement of the training cost:
Buyers must complete the full online HomePath Ready Buyer training course on and receive the Certificate of Completion.
The buyer must be a first-time homebuyer (did not own a property in the past three years) with plans to reside in the property as their primary residence. Auction, pool and investor sales are not eligible.
The request for closing cost assistance must be made at the initial offer, submitted on or after April 14, 2015.
And.. CoreLogic has released its February 2015 National Foreclosure Report which shows that the foreclosure inventory declined by 27.3 percent and completed foreclosures declined by 15.7 percent from February 2014. According to CoreLogic data, there were 39,000 completed foreclosures nationwide in February 2015, down from 46,000 in February 2014 and representing a decrease of 67 percent from the peak of completed foreclosures in September 2010.
That is it, make today great!!!

Wednesday, April 8, 2015

Mortgage Bond Market Analysis - Hump Day edition

It's already hump day and the benchmark bond is looking for direction.  With very little economic data this week, traders aren't sure if they should buy or sell.  Last week we got a boost with some bad data including a really bad reading for the Chicago PMI and the non-farm payrolls report.  The March ISM Manufacturing report was also disappointing but still showed slow growth.  Conversely, Monday brought the March ISM non-manufacturing report which came in about as expected and showed better growth which gave traders reason to sell bonds instead of buy on some follow-through from the short trading day on Friday that had an abysmal non-farms payroll number.

The benchmark bond has been approaching the oversold mark as far as the RSI is concerned but the bond is currently trading down 16 basis points on the day at 102.30 which is just 3 basis points above the first resistance level which will act more like a support level at this point.  The 2nd resistance level of 102.7 held strong as the initial breakthrough on Friday was pushed back and Monday didn't provide much of a fight with the strong non-manufacturing ISM numbers.

We will get the FOMC minutes at about 11:15 PDT which may help traders get a better understanding of what the Fed is thinking and whether they should buy or sell bonds.  Here is a snapshot of the bond chart from this morning:

Rates are excellent but if the FOMC minutes give traders the impetus to sell, you could miss out on an opportunity right now.  If you want to be safe, I'd lock the rate on any loan that is submitted but if you want to roll the dice, then feel free to float and hope that what the Fed minutes say give traders reason to buy bonds.

Feel free to contact me if I can help with anything mortgage-related - 702-812-1214.  Make it a great day.

Friday, April 3, 2015

Mortgage Bond Market Analysis - The good, the bad, and the ugly edition

Happy Friday and be glad you have a job.  If you don't have a job, it may be hard to find one based on today's non-farm payrolls report.  Yesterday the weekly initial jobless claims exceeded expectations and the benchmark bond sold off pushing rates a bit higher with the bond ending the day down 25 basis points.

The UGLY:  About face.  Backward, march. This is about what happened this morning considering that expectations for non-farm payrolls were 245K and came in at...126K.  This is a HUGE miss.  To compound this extremely poor data reading, the previous three months were revised downward a combined 69K.

The Bad / confusing: Recently we've had some strong consumer confidence numbers but they have all been because of good jobs reports since they are translating into any consumer spending to speak of.  It will be interesting to see the next consumer confidence reports to see how this abysmal jobs report impacts them.

The Good:  The FNMA benchmark bond is 31 basis points off its morning high but is still up 40 basis points on the day and has trended up over the last half hour.  Including yesterday's decline, we are up a net 15 basis points.  It is currently at 102.71, 16 basis points above the 2nd resistance level.  I continue to recommend floating with caution if you have a loan closing 15-30 days out - always be ready to lock quickly (this means your loan officer has to be on top of the market).

Feel free to contact me if I can help with anything mortgage related - 702-812-1214.  Make it a great day and a better weekend.

Wednesday, April 1, 2015

Mortgage Bond Market Analysis - April Fools edition

It's April Fools and I wish that the ADP Private Payrolls numbers were a joke.   The only joke is how pathetic they are, coming in at 189K vs. expectations of 225K.  ISM Manufacturing came in at 51.5 vs. expectations of 52.9 and the only data point that beat expectations was still negative with construction spending at -.1% vs. expectations of -.3%.  All in all it shows that our economy continues to struggle.  Of course the silver lining is that rates continue to be phenomenal.  The FNMA benchmark bond is up 26 basis points as I right this at 102.57 which is 2 basis points above the new 2nd level of resistance.  The RSI is also up to just below overbought but if the negative news keeps flowing, I wouldn't worry about it too much.

We are 87 basis points below our most recent closing high of 103.44 on January 30th.  A bad weekly jobless claims report tomorrow followed by a weak non-farm payrolls report on Friday could possibly get us back to that vicinity - I'm not counting on it but it is possible.  Nonetheless, rates are really great so locking in these gains (we've had 4 days in a row of gains in the benchmark bond with the +23 basis point close yesterday) is a very good thing but I would probably float with caution (be ready to lock as soon as any good economic news comes out to try to beat a re-price - problem is, the news is out before most lock desks are open so you really just have to roll the dice with tomorrow and Friday's news).

I'm off to start my day but feel free to contact me if I can help with anything mortgage-related - 702-812-1214.  Make it a great day.