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Tuesday, September 8, 2015

Mortgage Bond Market Analysis - The Tuesday / Monday edition

It's Tuesday morning after Labor Day weekend and bond traders are making things happen.  Part of the impetus is coming from the stock market which is up 295 points (DJIA) as I write this which means money is flowing from the bond market to the stock market.  From a technical standpoint, the FNMA benchmark bond closed above the 1st resistance level of 103.83 on Thursday and Friday but is being beat down this morning, currently down 19 basis points which isn't huge but enough to bring it back below the resistance level.

On the positive side, the RSI (Relative Strength Indicator / Index) is much closer to oversold than overbought which may entice traders to buy if we get some weak economic data this week.  If you've been reading my blog for long, you know that with bonds, rates / yields move inversely with bond prices so when investors buy bonds, pushing prices up, rates / yields drop.

This weeks economic data:  There are a couple of data points that could impact rates this week.  The Jobless Claims report is on Thursday like always but this hasn't been much of a factor over the last few months since the numbers have all been relatively close to expectations or offset by other data.  I don't expect anything different this week.  Wholesale Inventories is also released on Thursday and is expected to be down from last month which would show the economy isn't growing as fast as maybe it should be in order to justify a rate hike for the Fed.  The PPI is released on Friday and expectations are for lackluster numbers and while this will support those who don't want to raise rates in September, this measure is not as important as the CPI which is a much better measure of economic health since our economy is very much based on the consumer.  The Labor Market Conditions Index was released today and that came in at 2.1 vs. estimates of 1.3.  This is negative for pricing and will be one part of the argument by the hawks to increase the Fed Funds rate.

Loan Programs of the Week:  Last week I highlighted our jumbo loan programs that could go to 95% LTV to $2.5mil and the Fresh Start program that allows for financing one day out of BK, short-sale or foreclosure.  This week the loan programs I'm highlighting are the W-2 only program for government and conventional loans (this means we don't need tax returns which means any deductions from line 21 on schedule A won't come into play).  The other program doesn't require any equity to use rents when converting a primary residence to a rental property to buy a new primary.  These two programs address very common challenges when trying to get buyers to qualify.  If you have any buyers who could benefit from any of these programs or who have other unique circumstances, please call me to discuss how we can help (801-853-8720 or 702-812-1214).  Make it a great day and a great week.

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