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.