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Monday, October 26, 2015

Mortgage Bond Market Analysis - Monday Morning QB

It's Monday and it's football season so it's time for fans to play Monday morning quarterback.  The University of Utah's quarterback had a bad game against USC which cost the Utes the victory.  He threw three meaningful interceptions (4 in total) with two of those either being returned for a touchdown or inside the 10 yard line giving our defense little chance to do anything.  USC played a better game than we did and pulled off the upset.  All is not lost and as long as we get back on our horse and ride, we can still have a great season.

As for the Mortgage bond market, the FNMA benchmark bond has capitulated in a very narrow range over the last 7 days and has been unable to break through the 104.56 and 104.63 resistance levels with any strength in order to make a solid move up.  Contrarily, the support level of 104.3 has held firm as well.  This means that rates remain wonderfully low as bond traders look for cues to buy with conviction and push prices higher and rates lower or to sell and exit the ride.  For now the RSI is a little above the half way mark between oversold and overbought and the bond is 5 basis points off its morning high at 104.5.

There is a bit of economic data this week including September New Home Sales today which came in at 468K, much weaker than the expected 550K; this is a bit contrary to the NAHB Sentiment Index which came in at 64 last week (very strong) vs. estimates of 62.  Next week will be data heavy with the three jobs reports:  ADP Private Payrolls on Wednesday, Jobless Claims on Thursday and Non-farm Payrolls on Friday.  There's a lot of other data in addition to those.  Last week the ECB, PBOC and BOJ (three key central banks) all continued or added to their stance of stimulating their economies.  With this in mind and the likelihood for mixed data and no data that shows a strong recovery, I anticipate bond prices to continue to trade in a tight range for the near future.  Like last week, I would lock for closings within 15 days and float for closings beyond the 15 day mark.  As always, if you choose to float, make sure to keep a close eye on the market so that you can lock quickly of the market moves against you.  Remember that the market is a live, heavily traded market so prices and rates fluctuate throughout the day.  On a bad day, we can lose .25 - .375% in rate and on a good day we can pick up about the same (down is more common than up as investors are cautious when setting rates).  Reading my posts each morning will help (reading them in the morning is best so that you have time during the day to lock if that's what you decide to do) but using a loan officer who follows the market closely will help insure that you lock at the right time, or at least at a good time.  Offering great rates like Noble Home Loans is a great start to getting a good rate on your mortgage but locking at the right time is just as important.  If I can help you or a client in any way, please contact me at 702-812-1214 or 801-853-8720.  Make it a great day and a better week.

On a final note, the World Series begins this week and the Mets make their every 1.5 decade appearance against the KC Royals.  Go Mets.

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