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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.

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