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Thursday, October 15, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's the day of reckoning for the New York Mets who play the final game of a 5 game series with the Los Angeles Dodgers in LA.  If they win, they advance to the National League Championship Series to play the Cubs (who would have bet on that matchup at the beginning of the season?) for the right to play in the World Series.  But the purpose of this post is really to talk about more exciting things like economic data, mortgage bonds and interest rates.

Getting to the data, I have to ask:  would you really be surprised if I told you the data is mixed?  Surprise - it's mixed.  Initial Jobless Claims came in better than expected at 255K vs. consensus expectations of 269K.  The CPI was also a bit better than expected with the headline number coming in exactly as expected at -.2% and the core CPI coming in at .2% vs. expectations of .1%.  The real disappointing news came from the manufacturing side where the NY Empire Manufacturing Index with a consensus estimate of -7.4% came in at -11.36%.  The Philly Fed Manufacturing Survey had expectations of -1 but the reality was -4.5.  These numbers will help to support the current pricing.

From a technical perspective, at 104.48, the FNMA benchmark bond is currently below both levels of resistance which are currently 104.56 and 104.63 respectively.  The bond is down 13 basis points for the day which is 8 basis points off its low and 18 basis points above the 1st support level.  The RSI isn't a factor right now with the current level just above the midline - smack dab (a highly technical term) between the overbought and oversold thresholds.  Tomorrow will bring us Industrial Production, Capacity Utilization, and the Michigan Consumer Sentiment Index in addition to the JOLTS report.  Locking now would take advantage of the nice +33 point day we had yesterday and safeguard against anymore downside.  I don't expect earth-shattering numbers tomorrow so floating isn't a bad idea as long as you keep a close eye on the market and are ready to lock at a moment's notice if the market moves strongly against you.

I'm available to help you or a client with anything mortgage-related - 801-853-8720 or 702-812-1214.  Make it a great day.

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