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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.

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