Yesterday, the FNMA benchmark bond closed down 29 basis points (133 basis point drop over the last 6 trading days) and well below YESTERDAYS 2nd level of support. This morning, we got some good news regarding the ISM non-manufacturing index; it came in at 57.8 vs. expectations of 56.4 and previous of 56.5. This means the economy is growing - specifically the service sector (anything above 50 is expansion). The other side of this coin is that it's bad news for interest rates. We had a bit of a sell off with the benchmark bond being down as much as 23 basis points from the open (yesterday's close) which was 11 basis points below the new 2nd support level of 101. It has rallied a bit since then and is currently 4 points above the 2nd support level at 101.04. Here's a snapshot of the chart:
Along with a few other bits of data, the big releases over the next three days are all employment related with the ADP Private Payroll report tomorrow, Initial Jobless Claims on Thursday (just like every week) and the Non-Farm Payrolls report and Unemployment Rate on Friday. Friday's numbers are supposed to be MUCH better than last months and if they come in anywhere close to expectations, rates could continue to get worse. On the positive side, the RSI (Relative Strength Indicator) has a reading of oversold but that may not save us since the benchmark bond is knocking on the door of the 2nd support level and the next level of support after it breaks through is the 200 day moving average which is about 30 basis points below the 2nd level of support. If it were me, I'd lock today to be safe and if rates improve over the coming weeks, float down to take advantage of that improvement. I'd love to earn your business and hopefully providing information like this is one way I can do that. Please feel free to call me at 702-812-1214 if I can help you with anything mortgage-related. Make it a great day.
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