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Wednesday, August 12, 2015

Mortgage Bond Market Analysis - Hump Day!!

It is Hump Day and we have more weird stuff going on with regard to mortgage bonds.  The JOLTS report is the only data point out today.  This is a jobs report that provides the number of backlogged open jobs.  It came in at 5.249 vs. estimates of 5.3.  This means there are still a lot of jobs open but they may not be jobs that provide a "living" wage (if you want that, go to school or get some skills training) but they are jobs nonetheless.

Yesterday the FNMA benchmark bond finished the day up 43 basis points but was 10 points off its high for the day.  It still closed above the 2nd level of resistance by 6 points at 103.98.  Despite the great day, the RSI still remains below the overbought level.  So far this morning the FNMA benchmark bond has been down slightly to even - which is where it's at right now.  The GNMA bond (FHA and VA) on the other hand has been outperforming the FNMA by a wide margin as it is currently up 29 basis points.  It would be a great time to lock an FHA or VA loan.

The 200 day moving average is not much higher than where the FNMA bond is right now and with the RSI approaching overbought, I would float with extreme caution if you are going to float.  Personally, I'd take my chips off the table ahead of tomorrow's data which includes jobless claims, retail sales, import prices and business inventories.  If you float, watch the market closely so that you can act fast.  Friday brings another quad-point data day with PPI, industrial production, capacity utilization and Michigan Consumer Sentiment Index.

As always, please feel free to share your comments and to call me if I can help in any way - 702-812-1214.  Make it a great day.

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