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Friday, June 12, 2015

Mortgage Bond Market Analysis - TGIF

The bond market has been a bit backwards yesterday and today.  The economic data that came out yesterday and today was mostly positive and yet we had a fantastic day yesterday as far as the benchmark bond (FNMA) was concerned - up 69 basis points. The bond broke through the 1st resistance level and backed off a bit closing right at the the 1st resistance level - 102.86.  This morning, despite more good / better than expected data, the bong tested the 2nd level of resistance climbing as high as 103.1 (3 basis points below the 2nd level of resistance) and sold off.  The FNMA benchmark bond is currently up 8 basis points and the GNMA (FHA and VA) is down 4 basis points.  The RSI (Relative Strength Index is now slightly above the oversold line after yesterday's big move.  Here's a snapshot of the chart:

I always like to lock on a good up day or after a nice run if the bias is there.  In a situation like this where the data seems to be more positive than negative and we are seeing a bias toward selling, I would lock on any upward movements and float the rate down if the buying continues.  There's at least one bond analyst who thinks we could be in for more selling.  Matt Graham thinks that the recent sell-off since the first of May might only be the 1st half of the actual run which means we could see much more selling sooner rather than later.  If that's the case, locking now would be the absolute right thing to do.

Feel free to call me if I can help with anything mortgage-related - 702-812-1214.  Make it a great day and a better weekend.

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