Search This Blog

Friday, August 28, 2015

Mortgage Bond Market Analysis - TGIF

It's Friday after a completely crazy week.  The markets are a lot calmer this morning with the DJIA just down 33 points as of this writing.  The economic data all came in at or very near expectations.  Core Personal Consumption Expenditures came in at .1 vs. expectations and previous of .1.  Personal Spending came in at .3 vs. expectations of .4 and previous of .3.  Personal Income was .4 vs. estimates and previous of .4.  The largest various of the releases today was from the Michigan Consumer Sentiment Index which came in at 91.9 vs. estimates of 93 and previous of 92.9.

Later today we should get some information from the Fed with regard to the Jackson Hole Symposium - with Yellen and half of the Fed not in attendance that should help keep it on the tame side.  The only data that could justify a Fed rate hike in the near future is the 2nd reading of the 2nd quarter GDP which was 3.7%.  All other data doesn't justify a move anytime soon and the popular thought is that a rate hike won't come in September as some Fed hawks have been pushing for.  If you gambled and floated into today, you should be o.k.  Yesterday, the FNMA benchmark bond was up 3 basis points and this morning it is currently up 20 basis points - that could change if we get any surprise announcements from the Fed later today.

If you or your clients have a loan that is more than 15 days from closing, I would float through the weekend with no economic data being released on Monday.  The headwind for the FNMA bond is the 2nd resistance level which is only 7 basis points above the current price and the RSI is very close to overbought.  The 200 day moving average is about 10 basis points above the 2nd level of resistance and provides a bit more headwind.  It's not likely we'll see a lot of upside movement in the bond which would benefit interest rates, but there's also not a lot of reason to sell at this point with the stock market relatively calm and no data until Tuesday.  This assumes no major announcements from the Fed.

Jobs week next week.  The first week of every month is always a big week with the various jobs announcements.  Wednesday kicks of the first of the jobs data with ADP Private Payrolls followed on Thursday with the Jobless Claims numbers and Friday gives us the most anticipated of the data with Non-farm Payrolls and the Unemployment Rate.  There's other data mixed in as well like the ISM Manufacturing Index on Tuesday and the ISM Non-manufacturing (service) Index on Thursday.  I would say that it's a good idea to lock by Tuesday's close (at least from my perspective now - wild things could happen between now and then to warrant locking sooner or to possibly float).  If you have a loan that is closing within 15 days, I would lock now.

Finally, the Mets had a dramatic come-from-behind win in 14 innings yesterday to extend their winning streak to 7 games.  College football starts next week (Thursday night is the Utes against Michigan - Utah beat Michigan in The Big House last year.  This year it's at Utah and it's Harbaugh's debut).  The third week of preseason NFL is this weekend as well.  Have a great weekend and feel free to contact me (801-853-8720 or 702-812-1214) if I can help with a pre-approval or any other mortgage related items.  Make it a great day and a better weekend.

No comments: