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Thursday, December 31, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday, New Years Eve Edition

The major holidays are almost over and we'll soon be back to our normal schedules but for now, we have the last of 2015's economic data and it's mixed (go figure) and mostly weak.  In my last post I wrote last weak I think I mentioned that I would be available but probably not writing much.  Here's a quick recap of the week.  Monday was a very quiet day with the FNMA benchmark bond finishing up 8 basis points.  Traders decided to sell on Tuesday with consumer confidence coming in much higher than expected (funny since Initial Jobless Claims were also much higher than expected today).  The bond sold off 26 basis points - not a major move but one of the bigger moves of the last couple of weeks.  Yesterday the bond recovered a bit, closing up 12 basis points with no real impetus for the move but it traded in a tight range all day and has been in a tight range for a while now.  This morning, the only bit of good economic news was the continuing jobless claims that came in lower than expected while initial claims came in 17K higher than expected at 287K.  Another really poor reading for the Chicago Purchasing Manager's Index is helping push the bond higher this morning.  Expectations for the Chicago PMI were 50 (below 50 is retraction, above is growth) and it came in at 42.9.  This is some recovery.

Needless to say, traders are buying bonds on this weak economic data and the FNMA benchmark bond is currently up 27 basis points.  The RSI is just above the mid-point between oversold and overbought so it's a non-factor.  The biggest headwind the bond will face is the 2nd level of resistance which is 103.21 - current price is 103.19, 4 basis points off the morning high.  With an early close to the market today and probably a light staff of traders, my guess is that it closes somewhere around where it's trading right now.  I think it's a good thing to lock now with rates still very good.  We could see some improvement next week with heavier volume returning after the light holiday season.  This would be a continuance of the buying based on the weak data today.  It's important to remember that next week is jobs week with the ADP Private Payroll report being released on Wednesday, Jobless Claims on Thursday and the unemployment rate and non-farm payrolls on Friday.  To be safe, I'd lock before these reports, especially Friday's.  If your lender has a float down option and the data is really bad such that traders buy bonds and push rates lower, you have the best of both worlds:  protection ahead of the reports with the ability to capitalize on them if rates get better.

That's all for this year.  I hope 2015 was a great year for you and that 2016 will be even better.  I'm always available to help in anyway I can and I would really love to earn your business.  Have a very happy and safe New Year.  

Thursday, December 24, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday AND...Christmas Eve

It's Christmas Eve and my stomach is already growling for the turkey dinner we're going to be having later today.  There's been a fair amount of (mixed) data over the last couple of days.  I intended to write a post yesterday but then had major problems with my internet and had to replace a modem so here I am.  Rather than go over every piece of data individually, I'll just say that the data was mixed but leaned toward good for the economy and not so much for rates.

In my post on Monday I recommended locking and taking advantage of the recent gains.  I also said that if you are going to float, watch the market closely so that you could act quickly to lock in case it moved against you.  After closing at 103.25 on Monday (43 basis points above Wednesday's close), Tuesday brought a different tone for the FNMA benchmark bond thanks to the data.  It was basically a steady sell-off throughout the day with the bond closing down 33 basis points at 102.92.  Yesterday was a very quiet day with very little movement.  The benchmark bond closed 14 basis points above it's low for the day but still down 1 basis point.  The market closes at 2:00 EST today and I really think that very little will happen.  Jobless Claims were a bit better than expected at 267K vs. 270K.

Locking wouldn't be a bad thing.  I don't expect too much to happen next week in between the Christmas and New Year's holidays but you never know.  Remember that light trading can be very volatile so if your lender offers a float down options I prefer to protect my clients by locking in case bonds sell off and rates move higher but if there is an impetus for traders to buy in the short term pushing rates low enough to be able to float down, that is the better option as far as I'm concerned.   That's all for now.  I probably won't have much in the way of posts next week but I will be available if I can help with a pre-approval or if you have questions regarding locking / floating.  I can be reached at 801-853-8720 or 702-812-1214 or by email at  Have a very Merry Christmas.

Monday, December 21, 2015

Mortgage Bond Market Analysis - Twas the Monday Before Christmas...

Twas the Monday before Christmas, only four days to go, 
My loan was submitted but I didn't know.
Should I lock or float?  What will rates do?
The anxiety is unnerving...if only I knew.

I looked high and low to see what I could find,
Nothing but sales pitches and fluff and things of that kind.
I asked friends and family about what they thought,
Some said to lock, some said I should not.

I turned to my Realtor to see if he could provide a clue,
But he said that's not his job, that's for loan officer to do.
So I called my loan guy who didn't hesitate.
He said "Lock right now; rates are great."

He talked about mortgage bonds and the charts he used,
He sounded like he knew, but I was sure confused.
So I asked him more questions and got great answers galore,
He gave me all the information I was seeking, and then gave some more.

I'm so happy I used him, he got me the perfect loan.
He helped me understand my choices to best afford my home.
He taught me financial concepts and strategies no loan officer ever had.
He even taught me more than my dear old dad.

He referred great professionals to help me in my quest,
To make sure my financial future would be the absolute best.
Now when people ask what mortgage guy is most prominent in my head,
I tell them only one name comes to mind - that name is Jed.

That's my little marketing poem - I hope you got a chuckle out of it along with the message that I will go above and beyond the typical loan stuff.  As I've mentioned before, I always try to add value to my referral partners and my clients.  My financial background as a Series 7 Licensed Representative when I was with Fidelity Investments helps me provide a financial perspective to clients that adds significant value to their transaction.  Helping them to lock at the right time gives them a better chance to get the best rate as opposed to those who claim to have the best rates - anyone can make that claim.  It takes an understanding of the mortgage bond market to deliver the best rates more often than not.

Referring financial professionals like CPAs, financial planners and estate planning attorney's is another way I add value to clients and referral partners and it helps complete the process for my clients.  Whether it's teaching clients the best strategies for real estate investing or the financial concepts behind the optimized down payment amount, I provide my clients with the expertise they need to give them the best chance at success while helping generate more business for my referral partners.

The bond market now and this week:  As I mentioned in the poem, now is a good time to lock.  After a 27 basis point increase to the FNMA benchmark bond on Thursday, the market provided some follow through on Friday with a +13 day and it is currently up another 9 basis points.  I expect the week to be quiet with many traders taking an early holiday.  As I said before, lighter trading can mean more volatility so a bad apple can spoil it for the bunch.  Floating isn't a bad thing at this point since the Fed has made its decision and the GDP numbers we'll see tomorrow aren't likely to be a big mover at this point.  As always, if you do float, make sure you keep a close eye on the market so that you can move quickly to lock if traders start selling.

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

Friday, December 18, 2015

Mortgage Bond Market Analysis - TGIF edition

TGIF!!  This is also my son's last day of school for the Christmas break - I love having the kids home.  Tomorrow is a BIG day with my son playing two basketball games for his high school team and the Utes play Duke at Madison Square Garden at 12:00 EST while the Utah football team plays BYU in the Vegas bowl at 3:30 EST.  Needless to say, I'm going to have to record both of the Utah games since my son's games will overlap both games a bit.  But on to the matter at hand - the mortgage bond market and the interest rates that are derived from it.

There was no data today and it will be light next week.  If you read my post yesterday, you know that I recommended floating (with caution - keep a sharp eye on the market) and today we are getting a bit of follow-through.  The FNMA benchmark bond closed up 27 basis points yesterday and is currently up 16 basis points, 4 basis points off its high for the day and 6 basis points below the 1st level of resistance which sits at 103.31.  As for the RSI, it is below the mid-point between oversold and overbought so there's more of a chance for more buying.

I will reiterate what I wrote yesterday when I said that next week will be a light trading week which means there could be some wild swings...that don't necessarily mean anything.  Markets act completely differently on low volume which is why you could pick up some nice gains if you float but it's also why you could lose them all of you don't watch the market closely and lock quickly if there's a swift move to the downside.  I'm available for you through the holidays and would welcome the opportunity to help you, a client or a friend - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Thursday, December 17, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

With all of the excitement yesterday from the Fed, Jobless Claims Thursday is taking a big back seat.  It shouldn't come as a surprise that we have some mixed data - nothing to big one way or the other, though.  Initial Jobless claims came in a tad better than expected at 271K vs. 275K expected.  Continuing Claims came in worse at 2,238K vs. expected of 2,220K.  In keeping with many of the other poor manufacturing data releases, the Philly Fed Manufacturing Survey came in at -5.9 vs. estimates of +2.0 and previous of 1.9.  Finally, Leading Economic Indicators came in at .4 which was better than estimates of .1 but worse than the previous reading of .6.

Yesterday I wrote about how we could see some buying in the mortgage bond market if the Fed came out with a weaker rate increase than expected.  While they raised the rate by the expected .25%, their comments were quite dovish and it did lead to some initial buying.  The FNMA benchmark bond was up as much as 20 basis points before retreating and closing down 9 basis points.  With more mixed data this morning, traders are in a good mood and doing some buying with the bond up 26 basis points.

After a 9-1 vote in October against raising the Fed Fund rate / target range, yesterday the vote was unanimous to raise it.  "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent (italics added)."  The range was 0 - .25% and it's now .25% - .5%.  The expectation is for 1.375% by next December which is an average increase of less than .125% per FOMC meeting which is still pretty accommodative.  "The stance of the monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation."

There you have it.  It's not the end of the world and with a stronger economy and higher employment, more people should be able to qualify for mortgages to buy homes which is a great thing for Realtors and mortgage lenders like me.  Check out my Free Mortgage Report  for a better understanding of the mortgage process, mortgage programs, mortgage insurance and strategies for your financial future.  Feel free to share it with friends, family and clients.

Tomorrow is a slow day and with the Fed's actions behind us, I am recommending to float (with caution).  If you have a loan closing in the next 15 days, I would lock and take advantage of this morning's gains but if your loan isn't closing for 15-30 days, I'd float and see if we get a bit of follow through tomorrow and Monday.  Trading will be light next week because of the holidays so it won't take as much to move the market one way or the other so it will be extra important to keep a close eye on the market if you are floating.  As always, I'm here to help - 801-853-8721 or 702-812-1214.  Make it a great day.

Wednesday, December 16, 2015

Mortgage Bond Market Analysis - Judgment Day

It's December 16th - not what you would typically consider as a very important day in December, unless you are anxiously awaiting the Fed's Interest Rate decision.  Today at around 2:00 EST, we will get the news about whether they have decided to start raising the Fed Funds Rate or not.  Traders have been preparing for a raise this week by selling the FNMA benchmark bond and pushing it down 48 basis points on Monday followed by another 12 basis points yesterday (finishing 19 basis points off its low) and it is currently down 12 basis points.  I don't expect a lot of fluctuation in price before the announcement.  I'm also not sure that a raise is fully priced in which means that there may be more selling if the Fed announces they are raising rates.

We had more data yesterday and today for the Fed to consider when they make their decision (I wish I were a fly on the wall in that meeting so that I can hear who's saying what and how strong their convictions are along with what they are paying the closest attention to).  Yesterday, the YOY CPI data, ex-food and energy, came in at 2% (the Fed's target, though this is just one of the inflation measures they use).  Today, November Building Permits were 1.289mil, much higher than the 1.150mil expected.  Housing starts were also much better than expected at 1.173mil vs. expectations of 1.14mil.  November Industrial Production was -0.06 vs. expectations of +.1 and Capacity Utilization was 77% vs. expectations of 77.5%.  The fact that we have a lot of headroom in terms of capacity means that inflation is likely not a big deal from the manufacturing side for at least a little while.  We know from the various manufacturing indices that manufacturing is mostly week and this morning's number confirms this; however, we also know that our economy is about 2/3 service and 1/3 manufacturing and with strong readings from the service sector, the Fed has more reason to raise rates.

From a technical standpoint, the first support level is at 102.73 (current bond price is 102.80) and the RSI is a non-factor at this point.  I might also add that the GNMA bond is underperforming the FNMA as it is down 39 basis points.  Like I said earlier, I'm not sure if a Fed increase is fully priced in, if it is, we may not see much (or any) sell off after the announcement; it is possible that we could see some buying if traders are expecting a .25% increase and the Fed only raises rates by .125%.  I'm not predicting anything, I'm just letting you know some of the possibilities.  I've been saying to lock for several days in advance of decision day today.  I still think there is more benefit to locking and removing the downside risk than I do to floating in the hopes of some price improvement.  I'd love to get your thoughts - please feel free to comment below.  Contact me if I can help with anything.  When it comes to interest rates, no one lender has the best rates every single day and the most important thing regarding interest rates is to work with a lender that has a good idea of when to lock because understanding when to lock is more important than using a lender who claims to have the lowest rates.  Of course, there are many other things that come into play relative to getting a mortgage such as the overall costs which include opportunity costs - these are dependent on how the loan is structured.  I can be reached at 801-853-8720 or 702-812-1214.  Make it a great day.

Monday, December 14, 2015

Mortgage Bond Market Analysis - What the heck is going on edition

It's Monday of Fed decision week and the bond market is back to reality.  Friday we got a gift when, in spite of better than expected data, traders still sold and rates got a bit better.  It was a one-day respite of the selling in advance of the Fed's decision on interest rates which will be announced on Wednesday.  As I was reading some things this morning I came across a few interesting thoughts about what the Fed will do and why.  He thinks that the Fed has to raise rates so that there is room to lower them again if / when the economy stumbles again.  He said that markets aren't buying the Fed's belief of continued growth.  Indeed, we have seen too much mixed data and most of the important data hasn't shown sustained growth trends; employment, manufacturing and service sector data have waffled and been week at best with few exceptions.

This same expert also noted that markets expect China's economy to continue to weaken and that the EU is worried enough that they are providing stimulus to the tune of 60bil euro's per month.  The PPI was basically meaningless last week with a reading of .5%.  We will get the CPI tomorrow and the Fed may be able to justify an increase based on that and the recent jobs data but even then, there have been misses and the numbers may only be good because of the seasonal employment boost.

In any case, the FNMA benchmark bond is down 34 basis points today after ending up 40 basis points on Friday.  At 103.17, it is currently 5 basis points below the 1st level of resistance.  I'm not sure this matters since the focus is all about what will the Fed do (the expectation is for them to raise the Fed Funds rate) and what will they say - traders want information about the future.  Justified or not, I would be locked - if you are floating, lock.  As I've said before, as far as bond prices are concerned, there is much more potential for downside risk than upside reward.  If what the Fed says and does provides impetus for traders to sell, it may go on for a few days or more.  Be safe and call me if I can help with anything - 801-853-8720 or 702-812-1214.  Make it a great day.

Friday, December 11, 2015

Mortgage Bond Market Analysis - Merry Christmas and Happy Chanukah edition

It's a great day all around.  It's Friday - for what that's worth, which may mean a weekend for some and more work for others.  It's also a day with a market anomaly.  Today we got some relatively important data that will factor into the Fed's decision next week.  Here's a look at all of the data.  November Retail Sales came in at .2%, a tad bit below estimates of .3%.  Ex-auto, the number was better at .4% vs. .3% estimates.  The PPI came in at .3%, much better (at least as far as percentages are concerned) than the .1% expected.  Core PPI (YOY) was also much stronger than expected at .5% vs. .2% estimated.  What we make of this is that consumers are starting to act on their sentiments by opening up their wallets.  Additionally, inflation is ticking up at the producer level but it is still quite a bit below the 2% target level of the Fed; the CPI, which comes out on the 15th, is really the number the Fed will be watching as far as inflation is concerned, though.  October Business Inventories were .0% vs. estimates of .1% and the Michigan Consumer Sentiment Index came in at 91.8 vs. estimates of 92 and previous of 93.1.  This is still a strong number.

Here's where the anomaly comes in:  we had better-than-expected data for the points that the Fed is going to be watching more closely and yet the FNMA benchmark bond is up quite strong.  It is 14 basis points of its morning high but still up 22 basis points on the day after losing 20 basis points yesterday.  This might be a sign that traders are starting to believe that the data doesn't support a Fed rate hike.  If for any reason your rate wasn't locked, today would be a good day to lock.  There's no data on Monday so my guess is trading will be relatively quiet ahead of the CPI number on Tuesday which is the last important piece of data for the Fed to consider before they announce their interest rate decision on Wednesday, the 16th.

As always, I'm happy to help in anyway I can - hopefully my blog provides you with at least some of the information you need to make decisions on locking / floating.  If you appreciate the information I provide, I would appreciate referrals for mortgages.  My company offers low rates, a wide variety of mortgage programs, and great service with our average closing time being around 3-3.5 weeks.  Contact me at 801-853-8720 or 702-812-1214 if I can help with anything.  Make it a great day and a better weekend.

Thursday, December 10, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's that time of the week:  Jobless Claims Thursday.  While jobs data is always important, especially in the eyes of the Fed which has their last FOMC meeting of 2015 next week and is analyzing every piece of data to decide whether next week is the right time to start raising the Fed Funds rate, the more important data will come tomorrow and Tuesday with Retail Sales, the Producer Price Index and the CPI on Tuesday (we also get Michigan's Consumer Sentiment Index and Business Inventories tomorrow).

Jobless Claims came in a fair amount higher than expected at 282K vs. 269K expected but the spin is that it's still quite a bit below the 300K threshold that indicates real weakness.  Import Prices came in at -.4%, higher than the expected -.8% but still low, which is good for inflation which is a big reason why the Fed might raise rates - the PPI and CPI especially will really get a close look from the Fed.  I'm not sure the data is strong enough, at least across the board to warrant an increase in the Fed Funds rate but there me be enough people who actually have a say who do want to raise the rate and will decide to do it if only because the market is expecting it.

The FNMA benchmark bond closed up yesterday by 4 basis points after trading in a tight range for most of the day.  It's is down 10 basis points as of this writing but it is 6 basis points off its low.  I would remain cautious through the Fed decision.  I would lock if you haven't already.  If something happens where traders decide to jump in to the market in a big way and push bond prices higher driving rates down, you can float down (if your lender offers that option).  Like I said over the last few days, the risk of floating and having rates move against you is much bigger than the reward you might get for what would likely be only minor improvement.

Make it a great day and contact me if I can help in any way:  801-853-8720 or 702-812-1214.

Tuesday, December 8, 2015

Mortgage Bond Market Analysis - Inching Closer to the Fed Decision

Happy Tuesday.  Three more data points that are weaker than expected.  The NFIB Business Optimism Index came in at 94.8 vs. expected of 96 and previous of 96.1.  JOLTS came in a fair amount weaker at 5.383 vs. expected of 5.525 and previous of 5.526.  Finally, IBD / TIPP Economic Optimism came in better than expected at 47.2 vs. 45.2 and previous of 45.5 but still below the benchmark 50 that would show some decent optimism.

Last Thursday, mortgage bonds sold off in a big way when Draghi didn't come through with the stimulus as promised.  This is typical of financial markets - investors / traders don't like to be surprised in a bad way and when they are, they bail.  While there is reason to keep rates where they are as far as the Fed is concerned, there is also reason to begin raising the Fed Funds rate if only to remain in line with expectations.  While we may get some buying if the Fed surprised us and stood pat, it may also cause the markets to be in turmoil with a lack of confidence in the Fed.  That said, if the data doesn't warrant an increase, then so be it, but it's not that cut and dry.  The economy isn't very strong but it is improving.  Inflation data is ticking up along with the jobs data, which is expected.  The CPI which comes out on the 15th may be the tipping point if the Fed hasn't already made up its collective mind by then.

Yesterday I wrote about the resistance levels the bond faced with the first level not being too strong but the 2nd level being a bit stronger with the 100 day moving average being at that level as well.  Add in the possibility of a Fed increase next week and prolonged buying is not likely.  Traders pushed the bond to the 2nd resistance level and ultimately it held with traders selling off in the afternoon.  The FNMA benchmark bond closed 17 basis point off its high of 103.72 (the 2nd resistance level) but it still closed up 21 basis points to close 7 basis points above the 1st resistance level.  The bond is currently down 5 basis points at 103.50.  Like yesterday, I would recommend locking to take advantage of the gains.  There is very little potential for upside movement and the risks far outweigh the reward.  There is important data coming out on Thursday and Friday and I wouldn't want to float going into that data.

Contact me at 801-853-8720 or 702-812-1214 if I can help with anything and make it a great day.

Monday, December 7, 2015

Mortgage Bond Market Analysis - Monday Edition

Happy Monday.  I hope you had a great weekend.  It's a fairly light week for data with nothing very important until we get to Thursday and Friday.  Thursday brings Jobless Claims and Import Prices and Friday we get Retail Sales, Business Inventories, Michigan Consumer Sentiment Index and, most importantly, the Producer Price Index.  The PPI along with the CPI we get on the 15th will likely weigh heavily on the Fed's decision on the 16th along with the (strong) jobs numbers from last week.

In my post on Friday I said that the charts were looking like the bond would likely trend higher throughout the day, which it did, closing up 25 basis points and getting back some of the losses from the previous days.  We get Labor Market Conditions Index and Consumer Credit Change today but this data isn't likely to have much influence on bond prices.  We have some headwind with the first level of resistance at 103.48 roughly the same as the 25 day moving average (the FNMA benchmark bond just broke through this level and is at 103.52 - we'll see if it can close above this level).  The 2nd level of resistance is even stronger at 103.72 with the 100 day moving average also being right at that level.

While the likelihood of a Fed rate hike isn't as strong as it was before Janet Yellen's comments last week, I think trader's are still very skeptical about the situation.  We will have a better idea by the end of the week and again after the CPI is released next Tuesday but waiting to lock until then is dangerous.  We've had a nice little recovery on Friday and this morning and I would take advantage of it and lock if I haven't locked yet.  Don't hesitate to contact me if I can help in anyway - 702-812-1214 or 801-853-8720.  Make it a great day.

Friday, December 4, 2015

Mortgage Bond Market Analysis - Freaky Friday Edition: The Last Day of Jobs Data

Well it's Friday and we have a bit of an anomaly happening unless you take one thing into consideration (maybe two).  Today is the 3rd and last day of the jobs data and it was all strong - there was nothing mixed about it.  Non-farm Payrolls came in at 211K vs. estimates of 196K.  October's reading was revised upward to 298K from 271K.  The Unemployment Rate stayed even at 5% as expected and the Labor Force Participation Rate went from 62.4% to 62.5%.  Average Hourly Wages came in as expected with a .2% increase and the YOY figure is at 2.3%.  This is all good news for the economy and negative for pricing yet the FNMA benchmark bond is up 10 basis points after being obliterated yesterday with a 56 basis point sell-off.  So what gives?

On the fundamental side of things, the bond market was getting close to oversold so maybe the traders thought that could make a quick trade for some profits.  More probable are some comments Janet Yellen made yesterday.  The first comment is just a "good to know" comment:  it takes about 100,000 jobs to absorb the new workers entering the workforce every month; anything over that helps to employ the unemployed, discouraged or those who had dropped out of the labor force.  The comment that may have given bond traders the impetus to do a little buying this morning in the face of this strong data was that the United States may be "close to the point at which we should be raising."  This comment doesn't feel like one that is definitive that they will start raising the Fed Funds rate; it is far more nebulous.  There are many experts who have been acting / talking as if an increase to the Fed Funds rate is a foregone conclusion.  Maybe it's not; apparently the bond traders have some renewed hope.

I would say that if you didn't lock on Tuesday when I first recommended it, or haven't locked since then, I would float at this point.  The FNMA benchmark bond is currently up 14 basis points contrary to this strong data, and it has the initial look that it may trend up during the day.  I would keep a watchful eye on the market so that you could lock quickly if needed.  If the bond does trend up during the day, I'd probably float through the weekend and see what Monday brings.  As always, contact me if I can help with anything mortgage related, including an intra-day update on the mortgage bond market to see if you should lock or float - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Thursday, December 3, 2015

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's Thursday and we are into day two of the three day jobs data period.  We have mixed data - you don't expect anything else, do you?  Here's the scoop as far as the data is concerned:  Initial Jobless Claims came in at 269K, 1K higher than the 268K expected.  Continuing Jobless Claims came in at 2,161K, 26K lower than expected - this is negative for pricing (i.e. bad for rates).  The ISM Non-manufacturing index came in at 55.9, 2.4 points lower than the expected 58.3 but still a strong showing as it is well above the 50 level which shows growth.  This is a more important index than the manufacturing side since the service sector / consumers make up 2/3 or our economy.  Factory orders were a bit hotter than expected at 1.5 vs. estimates of 1.4.

How is the bond market reacting to the data?  I'll say it again, on Tuesday I recommended that you / your clients lock ahead of the jobs data.  The FNMA benchmark bond just had a nice little run-up.  Taking advantage of those gains were ideal.  Yesterday the benchmark bond was down 28 basis points, erasing all but 2 basis points of Tuesday's gains.  Today it's down 32 basis points taking us back to November 23 pricing and erasing all of the gains from the run-up.  I reiterate the lock recommendation as more good data tomorrow will help continue the sell off.  If you lock now and rates improve dramatically (not likely considering how close we are to the 16th and what many consider a lock for the first Fed Funds Rate increase), you could float down - assuming your lender offers this option.  The RSI is now a bit closer to oversold than overbought so there is that.  Our first support level is just 11 basis points below the current level of 103.33.  All of the moving averages are above the current pricing level so the first support level is not real strong and a sell-off could snowball into something big.  The downside risk is much bigger than the potential upside reward.

Contact me if I can help in anyway - 801-853-8720 or 702-812-1214.  Make it a great day.

Wednesday, December 2, 2015

Mortgage Bond Market Analysis - Hump Day Edition

It's already Hump Day which means...we get the first bit of jobs data from jobs week.  This morning the ADP Private Payrolls Report came out and at 217K it blew away estimates of 183K.  While this doesn't always translate to good numbers in the Non-farm Payrolls or the Unemployment rate but it did last month and traders are selling on the news.  Another drag on the FNMA benchmark bond this morning is the Unit Labor Costs which shot up to 1.8% from .9%; this is, of course, inflationary and would provide reason for the Fed to raise the Funds rate.

Yesterday I recommended locking ahead of the jobs data today and with an up day of 30 basis points preceded by a 19 basis point up day, it would have been ideal to lock especially when today the bond is selling off and is currently down 24 basis points nearly wiping out all of yesterday's gains.  If you didn't follow my advice yesterday to lock, I would reiterate my stance to lock ahead of the upcoming data because I believe there is a greater likelihood of more deterioration than there is for upside gain.
For those who use me to help them with their mortgages, they can attest that the information I provided them goes far beyond advice about when to lock.  While getting a great rate means locking at the right time, not just using a lender who claims they have the best rates, there is so much more that goes in to a client's financial success and that means educating them regarding financial principals and then helping them understand the options about how the various ways of structuring their loan will impact their financial future.  I do this for my clients and would love to help you with your loan or your clients' / friends' loans.  Contact me with any mortgage-related questions at 702-812-1214 or 801-853-8720.  Make it a great day.

Tuesday, December 1, 2015

Mortgage Bond Market Analysis - December 1st Edition

Happy December.  11 Days until my wife's birthday (she'll be 29), 13 days until my daughter's (interestingly enough, she'll be 19 - just 10 years behind my wife), and 24 days until Christmas.  We are also 15 days until the Fed reveals their interest rate decision which many are prognosticating a raise / tightening.  If you read my blog yesterday, or much in the past, you know the first week of the month is Jobs week and the data we get this week will be very telling.  While the vote was 9-1 against tightening the last two Fed meetings, past actions do not guarantee future results.  The Chicago PMI was weak yesterday, below 50.  Today we get the ISM Manufacturing Index which had expectations of 50.3 and it came in at 48.6; this is the 2nd manufacturing number in as many days to come in below 50 which shows retraction.  This is a good argument for the Doves (the Fed voters who are cautious about raising rates).  Conversely, Construction Spending came in at 1.0 vs. estimates of .5.  Of the two numbers, I think the more important one for the Fed is the manufacturing number.

Yesterday the FNMA benchmark bond closed up 19 basis points and after this morning's weak manufacturing data, it is up another 14 basis points.  With two decent gains like this, I would take advantage of it and lock ahead of the employment numbers we will see over the next three days.  In addition to all of the employment numbers, we also get the ISM Non-manufacturing data on Thursday along with the ECB Policy Statement and some comments from Janet Yellen.  One important reminder regarding the employment numbers is that these all include seasonal employment for the holidays and there's no way to know how many of these workers will be able to parlay their temporary employment into permanent jobs.  Contact me if I can help with anything (801-853-8720 or 702-812-1214) and make it a great day.