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Friday, July 24, 2015

Mortgage Bond Market Analysis - All (Relatively) Quiet on the Mortgage Bond Front

IT'S FRIDAY!!  That's a good thing for those who have normal weekends.  For Realtors and loan officers, work rarely stops.  Yesterday there were two data points that came in above expectations and instead of selling off, investors bought bonds and rates improved.  Today must be opposite day because New Home Sales, expected to come in at 550K, came in at 482K which was also down from last month's 546K and there is a slight sell-off in mortgage bonds which means rates are creeping up, if ever so slightly.

The FOMC meets on Tuesday so with no more data today I expect little to no volatility in the bond market until traders can get a better idea of what the Fed is thinking.  The Greek Parliament approved the austerity measures that their prime minister worked out with creditors.  This makes Greece eligible for loans from the IMF.  The problem now is that the IMF will not put the other 187 member nations at risk until the Euro nations significantly ease the terms on Greece's existing loans.  Germany has been against any debt relief to this point so while there is progress, there is still no resolution until more concessions are made.

There is potential for a breakout from our narrow trading range with either something substantive from the Fed after their FOMC meeting next week or a true resolution to the Greece debt issue.  I wouldn't worry about locking until Monday sometime, probably even Tuesday.  At the latest, you may want to lock by Wednesday morning - the Fed interest rate decision comes out at 11:15 a.m. PDT on Wednesday.

On the data docket for next week:  We had four data points this week - very light.  Monday starts off the data week with Durable Goods Orders - this could have some influence on mortgage bonds, but probably not too much.  Tuesday is the Case-Schiller Home Price Index - influence factor on mortgage bonds is likely to be minimal.  Wednesday brings Consumer Confidence, Pending Home Sales and the biggie - the Fed Interest Rate Decision.  Thursday is Jobless Claims (as always) and Gross Domestic Purchase Price Index.  Finally on Friday we will see the bi-weekly Michigan Consumer Sentiment Index and the Chicago Purchasing Managers' Index (this could definitely influence the mortgage bond market and interest rates).  I should mention that the FNMA benchmark bond is currently down 3 basis points (no biggie) at 103.31 - 4 basis points above the 1st level of resistance.

I'm available today and over the weekend to provide pre-approvals if you need one.  I would like to see the last two years of tax returns and W-2s / 1099s as well as the most recent 30 days of pay stubs and 2 months of bank statements (all pages) so that I can provide you with a legitimate approval.  Feel free to call me at 702-812-1214 if I can help in any way.  Make it a great day and a better weekend.

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