Mortgage Bond Market Analysis - Princess Bride edition

Happy Friday.  It's the first day of the Mets' playoff series and the 2nd game of the season for the Rangers (hockey) who got off on the right foot at Chicago on Wednesday with a win.  But I digress.  After all, we have a big weekend of college and NFL football (go Utes - beat Cal).  Of course, the real important stuff is what is going on with mortgage bonds and interest rates.  September Import Prices were -.1% which is good as far as inflation is concerned but this figure was better than the expected -.4% so that's not good.  The other piece of economic data to be released this morning was August Wholesale Inventories (old data) which came in at .1% vs. estimates of 0.  This is a slight negative for bond prices but is somewhat offset by the older July data which was updated to -.3% from -.1%.

After closing down 10 basis points yesterday at 104.37, the FNMA benchmark bond is down 2 basis points to 104.35 - the new 1st level of resistance is 104.39 with the 1st support level still at 104.25.  Both yesterday and this morning the benchmark bond has tested the support and it has held - every time the support (or resistance) is tested and holds, it gets stronger (kind of like lifting weights).  The bond is 10 basis points of its lows and is trending slightly upward since the data release.  If it continues, it could close the day in the green.

I'll be out of town through Tuesday and won't have any internet access to speak of but I will have my phone so feel free to call me if I can help with anything.  Monday is a holiday and the bond market is closed and the only data on Tuesday is NFIB Business Optimism Index - not a big market mover.  The rest of the week has some decent data with the Producer and Consumer Price Indices, Business Inventories, Michigan Consumer Sentiment Index, Philly Fed Manufacturing Survey, Industrial Production and the JOLTS Report in addition to the Fed Beige Book.

Finally, a very interesting quote from the FOMC Minutes that were released yesterday:  "The time to tighten is here...BUT it is appropriate to wait at this time."  WOW.  I'm not making this stuff up.  If the time to tighten is here, then tighten.  If it is appropriate to wait at this time then the time to tighten really isn't here.  I think they are confused.  It reminds me of a scene from one of my favorite movies, The Princess Bride.

For those of you who want a little action seen to kick off your weekend, here's the great sword fight scene.

Call me if I can help with anything - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.