It's Tuesday morning and there's little data to influence rates. After a 33 basis point sell-off yesterday, closing just above the 1st level of support and right at the 25 day moving average, the FNMA benchmark bond is up 27 basis points and is bumping its head on the 1st level of resistance which is at 104.08 as it's currently trading at 104.05. The 200 day moving average, which is a strong resistance level, is around 104.15. Like I said yesterday, the headwind for bond price appreciation is stronger than the support. However, with a light data day and negative news regarding Chinese banks (which is the impetus for the sell-off in the stock market and the increase in the bond market), I would float with CAUTION today if you didn't lock on Friday or yesterday. With the resistance level as strong as it is, I would be very surprised to see the bonds move much higher so it wouldn't be a bad thing to lock here and take back most of yesterday's losses - rates are truly great right now.
The Richmond Fed Manufacturing Index (not typically a big market mover) came in at -5 vs estimates of 4; its impact on pricing is nil but does show that in that region, economic growth isn't robust to say the least. One last quick look at the benchmark bond shows it has given up some of its gains as it's now up 19 basis points at 103.97. My guess is that we will see some capitulation throughout the day but the range will be quite narrow. With an economy that isn't very dynamic right now, the bond market is taking its cues from global news and the stock market and trying to guess what going to happen with either of those things is worse odds than a crap shoot. I'd lock on any gains and float on big sell-offs. That's all for today. Short and sweet. I'm always available to help with anything mortgage-related - 702-812-1214 or 801-853-8720. Make it a great day.