Search This Blog

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.

No comments: