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Tuesday, July 7, 2015

Mortgage Bond Market Analysis - China stealing the spotlight from Greece?

I've been away for a few days on a brief family vacation to celebrate my in-laws' 50th wedding anniversary.  While I was gone, the bond market continued it's recovery yesterday and this morning with some more help from around the world.  Greece continued to be the word last Thursday and yesterday after the Sunday vote showed the world that the citizens of Greece aren't long for paying their debt.  Today is more about China's stock market's big sell-off of about 40% - where's that money going?  You guessed:  to the safe-haven of bonds, including mortgage backed securities.

The benchmark bond has sold off from this morning's highs and is currently 36 basis points off its intraday high.  The RSI is approaching overbought but that may not matter if the bond can get a bit of traction and end the day with a rally since Greece and China are providing reasons for traders to seek the safe havens of bonds.  Here's a look at the chart:

I would float with caution, but I would pay special attention to what the bond does to finish the day.  I would also make sure to watch the market closely so that you can lock ahead of any re-prices should the market turn tomorrow if traders decide to consolidate some profits.  Feel free to call me if I can help with anything mortgage-related:  702-812-1214.  Make it a great day.

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