It's been quite the WILD ride this week. The bond markets have been crazy this week with a major sell-off on Monday where the FNMA benchmark bond lost 87 basis points on no data whatsoever. It was all about improvements in Europe and how their quantitative easing program is improving the economy with traders selling the German bund and pushing yields up about 70 basis points in just two weeks. In order to stay competitive, our yields have to increase as well which was the reason for the sell-off. Monday's move completely erased the gains we had on Thursday and Friday of last week but was followed up with a minor up day on Tuesday of 5 basis points which was 50 basis points off the low so the market showed some resiliency. Tuesday's trading was based on very little data and it was slightly negative.
Wednesday brought us some fairly week data yet the market acted opposite of what you might expect by selling off; the benchmark bond finished down 21 basis points. Retail Sales numbers were very disappointing and import prices were down as were business inventories. Yesterday initial jobless claims were lower than expected which is bad for interest rates but the Produce Price Index numbers, which is a measure of inflation, came in lower than expected which traders acted on by buying bonds. Finally, today the NY Empire Manufacturing index came in a fair amount lower than expected as did industrial production but the really big miss was Michigan's Consumer Sentiment index which came in at 88.6 vs. estimates of 96. The benchmark bond is currently up 52 basis points after a 47 basis point increase yesterday.
If it were me, I'd lock or recommend that my clients lock. I locked a loan for a client this morning and his pricing was much better today than it was on Wednesday. That's all for now. Please call me if I can help with anything mortgage-related - 702-812-1214. Make it a great day and a better weekend.