Mortgage Bond Market Analysis - TGIF and employment report edition

Would you expect to have anything other than mixed data?  Well we got mixed data, AGAIN.  Non-farm payrolls came in at 223K vs. expectations of 218K.  The prior month's reading was revised downward SHARPLY to 85K from 126K initial reading.  The unemployment rate is 5.4%, just as expected and down from 5.5%.  The good news for the bond market is that average hourly earnings were only up .1% vs. expectations of .2%.  This is good news because it means the Fed will likely wait longer before raising the Fed Funds rate since this is not inflationary.

Yesterday I recommended floating into today's data since our up day would be a hedge against a possible sell-off today.  I also said that it would be o.k. to lock yesterday and take advantage of the gain.  For those who waited to lock until today, you were rewarded.  The benchmark bond is up 43 basis points and with yesterday's gains, it has rebounded a total of 79 basis points.  At 101.54, the FNMA benchmark bond is currently 16 basis points off the high for the day and is 10 basis points above the 1st level of resistance and 25 basis points below the 2nd level.  The RSI has just creeped above the oversold threshold but with some more weak economic news, traders could push bond prices even higher which means better rates.  Here's a snapshot of this morning's chart:

If you need to lock today, you've benefited nicely from the last two trading days.  If you have a bit of time, I would probably float.  There is no data being released on Monday and very little on Tuesday.  Traders might continue to push the bond higher as long as the rest of the economic world plays nice.  As always, feel free to call me if I can help with anything mortgage related - 702-812-1214.  If you want to make sure you don't miss any of my posts, please either subscribe to my blog or "Like" The Wunderli Team facebook page.  Make it a great day and a better weekend.