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Monday, November 14, 2016

The FNMA Benchmark Bond Continues Its Selloff...

After Trump's victory on Tuesday, the stock markets have surged and while the gains this morning aren't nearly as big as they were last Wednesday through Friday, the sell-off in the mortgage bond market is about as big as last Wednesday.  In my last post I recommended locking but did think that there was a possibility of traders buying since the RSI was oversold then.  It remains oversold and even if the Fed decides to raise rates in December, at the current price of 100.19 the FNMA benchmark bond is oversold since it is down 264 basis points since the open at 102.83 on Wednesday (I should note that about 32 basis points of this was due to the monthly bond roll-over).  This translates into an increase in rate of about .5-.625%.  This is massive and is oversold by probably 150 basis points or more...unless they think the Fed might increase rates by more than .25% but that is not warranted based on the economic data.

While nobody has a crystal ball and it's hard to tell if bonds will continue to sell off, logic says that traders will see a buying opportunity sooner rather than later.  My recommendation would be to float - you may have to be patient which means you may need some time.  If you are closing within 15 days, you may not have the time.  Based on the prognostications of what the Fed has hinted at, the math says the market is oversold.  Contact me if I can help in any way, including current updates to how mortgage bonds are doing:  801-893-1737, 702-812-1214 or  I'd love to help you or a client / friend with a mortgage for a purchase of your home or any other mortgage need.  Keep a close eye on the mortgage bond market so that you can lock at a good time if traders start buying again.

Wednesday, November 9, 2016

The financial markets are acting oddly after Trump's victory

Happy Hump day.  Here's the thing - financial markets HATE uncertainty.  As I was watching the election show last night they talked about the Dow futures a couple of times and how much they were down when they started thinking that Trump was going to win.  They talked about how Trump is an unknown as far as how he'll govern and that the markets are reacting to this uncertainty.  As you now know, Trump won and the stock markets are loving it for the time being as they are all up somewhat nicely.  Usually, when there is uncertainty in the world, stocks sell off and money moves to the safe-haven investments of bonds which is what it was looking like last night but this morning is a completely different story.  The stock market indices are all up somewhat significantly while bonds are selling off.  In the case of the FNMA benchmark bond, it is down which is a bit over a .125% increase in rate.

While the media chose to focus on Trump as an unknown from a political perspective, I look at him as a known commodity in terms of a businessman.  To me, it makes perfect sense that a businessman would implement policies that are friendly to business which means an opportunity for growth.  This is what the financial markets are keying on this morning and with growth comes inflation and that means higher interest rates.  While people who are getting mortgages may not like the prospect of higher interest rates, growth also means more jobs with more opportunities and higher wages for more people.  Higher rates are a sign of a strong economy and rates have been low for so long because the economy has been week for so long.  Maybe the "new norm" of low interest rates won't be the norm for long and that's not necessarily a bad thing from a bigger perspective.  I would, however, recommend locking and cutting your losses.  I'll be locking a client today (it's the first day he was eligible to lock or I would have locked before the elections).  If your lender has a float-down option, you might be able to take advantage of it if the bond market turns after such a drastic reduction but I wouldn't count on it.

As always, feel free to contact me if I can help with anything mortgage-related.  801-893-1737 or 702-812-1214.  If you do float, keep a close eye on the bond market.

UPDATE:  As of 3:07 EST, I am thinking the bond has fallen far enough (down 97 basis points) that if you haven't locked, you may want to float.  I can't help but think there will be some rebound off of what I think is an over-reaction.  As always, keep a close eye on the market.

Wednesday, November 2, 2016

The calm before the storm? FOMC interest rate decision looms as does more data...

The benchmark bond rebounded yesterday and closed up just a tad (8 basis points).  This morning it is down two basis points and likely won’t have much activity ahead of the Fed interest rate announcement which is likely to be a non-factor since everyone is expecting the Fed to leave rates unchanged but all of the experts are hoping for some guidance relative to the December FOMC meeting.  Additionally, the ADP private payroll report was released this morning and missed big to the downside which is a slight positive for rates – it’s only slight because the report is not typically that accurate as it compares to the Non-farm Payrolls report on Friday.  However, most of the ADP reports over the last handful of months have been somewhat of an indicator as to the NFP reports that followed.  Hence, if a correlation exists this time, I would expect the NFP report to also be weak which would help bonds as well.

The bond is currently 10 basis points above the new 1st support level and if it breaks through the 200-day moving average it would have some room to run as long as it can also break through the 1st level of resistance at 103.19 (21 basis points above where it is now).  Currently, the 2nd resistance level is at 103.51 and the other moving averages are about 10ish points above that.  With a solemn report from the FOMC today and weak news tomorrow and especially in Friday's NFP report, it's possible we could see a bit of buying from the traders which would help interest rates.  I'm going to switch my stance to floating with EXTREME caution which means that you should keep a sharp eye on the bond market either by downloading my app (buyerZapp - upper right-hand corner of my blog) or by contacting me if you want to know how these things are impacting rates if I don't write about it:  702-812-1214 or 801-893-1737.

Tuesday, November 1, 2016

It's Jobs Week and the FNMA Benchmark Bond Continues Its Slide

It's Tuesday of Jobs Week and the FNMA benchmark bond continues its slide with the October ISM Manufacturing Index coming in a bit hotter than expected at 51.9 vs. 51.7 - anything over 50 is expansionary so this is good for the country, not so good for interest rates if you are getting a mortgage and haven't locked yet.  Tomorrow we get our first jobs report with ADP Private Payrolls.  We also get the Fed Interest Rate decision but nobody expects the Fed to make any move tomorrow.  We are hoping for some type of guidance with regard to the December meeting which is when many experts think they could make their next move with another increase; it is not a sure thing by any means as the Fed will be looking to see how the economy does between now and then as well as looking to see how the financial markets react to the elections.

Thursday we get Jobless Claims along with the ISM Non-manufacturing index (service sector) which has been strong even when the manufacturing side has been weak.  Friday we get Non-farm Payrolls and the Unemployment Rate along with a couple of less important data points.  The 10-year Treasury is above a key level and that isn't helping mortgage bonds but the one good thing is the RSI (Relative Strength Index) is below the oversold threshold.  another good thing is that so far this morning, the 2nd level of support has held up when the bond tried to break through.  One more good thing is that the bond is currently at the lowest level it's been at since June 24th - that's over 4 months.  These things could indicate that bond traders might take a risk and start buying bonds thinking that there could be a little run.  The other side of that philosophy is that at the current price, the benchmark bond is at a very tenuous point with not much support other than what I mentioned above; all of the moving average support levels are above the current price and would act as resistance to the bond moving progressively higher.  Here's a look at the current chart:

In my post on 10/18, I recommended locking.  Since then, the bond has sold off 49 basis points based on its current price and with all that's going on right now I will continue with my lock recommendation if you (or a client or friend) are in a position to lock; if you have to float or decide to float, keep a close eye on the market by installing my app (buyerZapp) with the link in the upper right-hand corner of my blog or you can always contact me for current information regarding bond prices and interest rates:  801-893-1737 or 702-812-1214.  

Tuesday, October 18, 2016

Mortgage Bond Market Analysis - No Data Surprises

It's Tuesday and we are on track for another positive day in the bond market.  On Friday, the FNMA benchmark bond closed down 29 basis points.  Yesterday, with no economic data released, the bond recovered a bit, closing up 15 basis points.  Today's data came in as expected, for the most part, and the bond continues its recovery as it is up 12 basis points.  The RSI has risen just above the oversold threshold and the bond tested the 1st support level of 103.30 which is really acting more like a resistance level because it is below the threshold at 103.25 but actually got to 103.33 before selling off a bit.

Economic Data:  The September MOM CPI came in as expected at .3% - a fairly strong reading.  The core reading came in a bit lower than expected at .1% vs. expectations of .2% - this is a good showing for inflation.  The core YOY came in at 2.2% vs. expectations of 2.3%.  The NAHB Housing Market Index came in as expected at 63 which is very strong since any reading over 50 shows growth.

The benchmark bond may have bottomed out for now.  It is currently up 18 basis points and 1 basis point above the 1st level of support, 5 basis points below the 1st level of resistance.  Not sure how much higher the bond will go since the data was as expected today.  Tomorrow we get housing starts, building permits and the Fed Beige Book.  Thursday brings us the Philadelphia Fed Manufacturing Index, existing home sales, leading economic indicators along with jobless claims.

As of this moment, the bond is up 14 basis points.  There is a lot of resistance as it tries to move higher with the 1st support level right above the current price and the first resistance level six points above that.  Then you have the moving averages beginning with the 100-day that's at about 103.48, then the 50-day at about 103.58 and finally, the 25-day at about 103.68 and then you have the 2nd resistance level at 103.72.  With all of this resistance, I continue my recommendation to lock on any up days.  We've had a couple in a row now so if you haven't locked, this would be a great time to lock.  If you do float, keep a close eye on the market.

Friday, October 14, 2016

Mortgage Bond Market Analysis: Economic Data and Janet Yellen's Comments

If nothing else, it's Friday and that means lots of college football tomorrow (and probably some BBQing and just good food in general).  After Wednesday's fall of 30 basis points, the FNMA benchmark bond recovered most of the loss yesterday, closing up 21 basis points.  Today, the bond has been on a bit of a roller coaster ride although more of a kiddie version with the range being on the narrow side with a high of 103.32 and a low of 103.09.  It opened at 103.27 so it's been up as much as 5 basis points and down as much as 18 and it is currently down 13 basis points after recently seeing its high.

The drivers:  August Business Inventories came in as expected, up .2%.  September Headline Retail Sales also came in as expected at +.6%; ex-autos it was slightly better than expected at .5% vs. expectations of .4%.  The PPI came in a bit hotter than expected with a reading of .3% vs. .2% expected.  Both the MOM and the YOY Core PPI came in as expected at .2% and 1.2% respectively.  This data is all a tad bit negative for pricing and is why we are seeing some pressure to sell.  Where we are getting some support is from the October Preliminary Michigan Consumer Sentiment Index that came in much lower than expected at 87.9 vs. expectations of 91.9 - better jobs numbers don't seem to be translating into more confident consumers in spite of better retail sales this month - you may recall that they were weak last month and that the NFP from last week was also on the weak side though the Labor Participation Rate has increased.  This is all a bit confounding - a word Janet Yellen used in her comments this morning.

Janet Yellen's comments:  From the Associated Press - "Federal Reserve Chair Janet Yellen says the slow recovery from the Great Recession has surprised economists, confounding long-held beliefs about growth and inflation. Her remarks at an economic conference may help explain why the Fed has been reluctant to raise U.S. interest rates."  "She says the aftermath of the crisis has "revealed limits in economists' understanding of the economy." For example, tumbling home prices reduced consumers' willingness to spend more than economists had envisioned. And a steady decline in the unemployment rate has failed to lift wages and inflation as much as expected."

I would expect this dovish comments to have a positive impact but so far that has not been the case.  Perhaps bond traders were hoping for more direction in her comments but there was no mention about interest rates regarding when the Fed might next raise them.  They raised them last December and the stock market proceeded to take a big tumble so they are being extra cautious.   We are very close to our recent lows and the RSI remains below the oversold threshold.  With the election drawing near, I think traders might be a bit skittish about who will win and how that might impact the economy.  The fact that China's inflation rate was higher than expected isn't helping.  I would lock on any up day in the bond market and would probably not wait for an up day since the resistance seems to be stronger than the support and the support is a fair amount further down than the resistance is up.  

As always, I'm happy to help and in spite of all the college football over the weekend, I'll be available if you need me.  I can be reached at 801-893-1737 or 702-812-1214.  Make it a great day and a better weekend.    

Tuesday, October 11, 2016

Mortgage Bond Market Analysis - Mixed Data: Where's the Market Headed?

Happy Tuesday.  The bond markets were closed yesterday for Columbus Day but are swinging back into action today.  The FNMA benchmark bond was down as much as 31 basis points before doing an about-face - it is now down only 8 basis points as the first level of support at 103.3 held strong.  The flip side is that the first level of resistance (103.55) also seems to be strong as well.  The RSI is oversold so there could be some buying but would it be enough to push through the resistance level?  The sooner the better since the first resistance level is only two days old and may not be all that strong yet.

From a data standpoint, Non-farm Payrolls came in at 156K for September vs. estimates of 175K.  This is over a 10% miss and it's also somewhat week for an economic recovery.  That said, August NFP numbers were revised upward to 167K from 151K - a 10% upward revision so that helps to offset the miss.  Additionally, the Unemployment rate came in at 5% which is higher than last month's reading of 4.9% and while that might be bad in some cases, in this case, it's actually a positive because of the increase in the Labor Participation Rate.  Average hourly wages came in as expected at +.2%.

If you or a client / friend have a loan in process, you might want to think about locking.  I'm not sure that there will be any big moves upward in bond prices which would push rates lower.  There's a decent likelihood that the benchmark bond will be trading in a very tight range.  You can lock now and take advantage of the great rates that still exist or you can float and if the RSI is accurate - it isn't always a great indicator - then you could pick up some better pricing if the bond trends up in the near future.  As always, I'm happy to help any way I can.  Make it a great day and a better week.

Wednesday, October 5, 2016

Mortgage Bond Market Analysis - Did you lock?

Happy Hump Day.  My calendar is a bit off this week since I was still on my short vacation on Monday so yesterday was my Monday and it's hard to believe that it's already Wednesday.

On Monday, September 26th, I recommended locking as I thought we were close to the top if we weren't there.  I thought there was a much greater risk to a sell-off than there was potential for more significant buying.  The next day gave us five more basis points, which is basically nothing as about 50 basis points is .125% in rate, and on Wednesday morning with the market opening a bit higher, I reiterated my recommendation to lock.  I thought the data, as well as the fundamentals of the bond, warranted it.  Let's take a look at the chart:

The FNMA benchmark bond closed down 13 basis points on Wednesday and then bounced back 4 basis points on Thursday.  It closed down another 5 basis points on Friday and 6 on Monday followed by a 34 basis point fall yesterday and it's currently down 12 basis points for a total of a 66 basis point loss since my lock recommendation - this translates into an increase in rate of about .125% plus some additional costs for the new rate.
The Economic Data
It's Jobs Week and the ADP Private Payroll Report came out today and it missed expectations, coming in at 154K (on the weak side for a "recovery") vs. 166K expected.  The real kicker today is the ISM Non-manufacturing Index (Services) which came in at 57.1 (very strong) and obliterated the estimates of 53; this is very bad for pricing although the ADP numbers will offset this to some extent.  Additionally, August Factory Orders were .2% vs. estimates of -.1% - also negative for pricing (which means bad for rates).

Where do we go from here?
Much of it depends on the data the rest of the week with a few key data points being released including Jobless Claims tomorrow (not usually a big market mover) and Non-farm Payrolls, Unemployment Rate and Wholesale Inventories on Friday.  With the sell-off, a lot of profits have been taken off the table so we could see some buying if the data warrants  it.  Potential buying will also be dependent upon where the bond closes today.  If the 1st level of support (103.40) holds - it is at 103.46 right now - traders could have confidence that we've reached a bottom for this little run and with the right data, they could decide to buy a bit.  The fact that the RSI is also approaching oversold could help.  I have two thoughts, though.  The first is that our high last Wednesday of 104.28 was the highest points since the bond hit 104.40 on July 6th - a day where it ended up closing down.  We are now 82 basis points off our recent high and while we could see some rebound in bond prices based on reasons just mentioned, I don't expect the buying to push prices beyond recent highs.  The other side of that coin is that while expectations for a rate hike are for the December meeting at the earliest, we also have the election which brings much uncertainty as does the geo-political events that are happening.  Uncertainty is good for bonds since they are considered safe-haven investments.  The perception of who our president will be and how he / she will do will also play a role in the decisions of traders to buy or sell bonds.  For now, I would float with caution.  My guess is that the jobs numbers will be on the weak side, even if they meet expectations.  If you do float, make sure you are staying on top of the market in case of a quick move in the wrong direction so that you can lock quickly, perhaps before a re-price for the worse.  I'm always happy to help so feel free to contact me if I can help with anything mortgage related - 801-893-1737 or 702-812-1214.  Make it a great day and a better finish to your week.

Wednesday, September 28, 2016

Mortgage Bond Market Analysis - Economic Data and Janet Yellen

It's Hump Day.  In addition to it being the middle of the week, we also got some decently important data today.  Durable Goods Orders was released and the headline number came in better than expected at 0.0% - expectations were for -1.4%.  The other side of the cone is that last month they were up 3.6% so while we weren't negative today, there also wasn't any growth.  Perhaps more importantly, was the Ex-transportation number which came in at -.4% as expected.  This number is thought to be a more stable number and, thus, looked at a bit more closely and it wasn't good.

Yesterday the FNMA benchmark bond closed up  for the 6th day in a row.  It was up 5 basis points, 13 basis points off its high as the 2nd level of resistance (104.17) held strong with the bond closing at 104.12.  Today the bond is currently down 4 basis points after being up as high as +16 basis points on the day; it is 12 BP off the low.  The high levels of the day once again tested the 2nd resistance level and was once again pushed back.  The more times the bond tests the level and loses, the stronger that resistance becomes and the more likely we are to see a sell-off as the next big move.  In other words, we may have hit our high for this most recent run.

Janet Yellen is giving her prepared remarks to the House Financial Services Committee.  Her remarks that have been released don't address anything about a path of rate hikes.  She'll be speaking again tomorrow.  There are also a number of other Fed presidents / governors sharing their thoughts this week as well.

With the RSI still in the overbought range and the euphoria of the Fed leaving rates unchanged wearing off, in addition to the 2nd resistance level holding strong two days in a row, I will reiterate what I said on Monday:  Lock.  I think there is much more potential for a sell-off than for any meaningful bond buying.  Remember that rates / yields move inversely to price so that as bonds sell off and drop in price, rates go up.

I'm always happy to help in any way I can so feel free to contact me at 801-893-1737 or 702-812-1214.  As a reminder, I'm leaving Friday for a vacation (I will have no cell service to speak of) so my next post will come whenever I get back - I may be gone all of next week and I may be back as early as Monday.  Make it a great day and a better end of the week.

Monday, September 26, 2016

Mortgage Bond Market Analysis - Money Monday

Happy Monday.  My Utes had a great come-from-behind victory on Friday to beat USC with three great touchdown drives in a row to end the game and win 31-27.  They are looking sharp on offense but a few injuries are keeping them from playing their best on defense.  Hopefully we can play good enough to win the south division of the PAC-12 this year.  Cal is next on Saturday at Berkeley.

As for the mortgage bond market, last Wednesday I recommended floating and we've been getting some follow-through from the Fed interest rate decision where they left it unchanged.  Since then, traders have continued to buy the FNMA benchmark bond and rates have improved.  It was just a slight up day on Friday with the bond closing up 3 basis points at 103.89.    This morning New Home Sales came in a bit better than expected at 609 vs. 600 but below last month's reading of 659.  In spite of the decent data, traders continue to buy the bond as it is up 20 basis points to 104.09 - this is 28 basis points above the 2nd level of resistance of 103.81.  The five-day buying spree has pushed the RSI quite a bit beyond the overbought level.

There are a few key data points this week in addition to a number of talking heads from the Fed including an address from Fed Chair Janet Yellen on Thursday at 5:00 EDT.  OPEC is meeting once again to talk about limiting production to get oil prices higher - even if they agree to do it there's no guarantee that the countries will follow the agreement.  Oil is up in anticipation of the meeting.  Today's chart of the benchmark bond looks like it might continue to push a bit higher throughout the day.  My thoughts are that I'm not confident that the data will be all that great so traders might continue to buy throughout the week.  That said, there could be some profit taking with the recent run and considering the fact that the RSI is overbought.  The talking heads from the Feds will likely have a bit of an influence as well - especially if their message is different from what's expected.  My recommendation is to lock if you or a client has a loan that is closing within 15 days; take advantage of this most recent run.  If you have a longer time frame than that, you could float but do so with extreme caution and keep a close eye on the market so that if the market turns against you, you can react quickly to lock ahead of a potential price change.

I'm always happy to help in any way I can be it a pre-approval or a question about rates or mortgage guidelines.  Feel free to contact me at 801-893-1737 or 702-812-1214.  Make it a great day and a better week.

Thursday, September 22, 2016

Mortgage Bond Market Analysis - Follow Through

It's Jobless Claims Thursday which means more data to draw on.  I'm a big sports fan and I've coached a fair amount of basketball over the years.  I've also played a number of different sports either competitively or recreationally (though I'm always competitive).  In about every sport I can think of, follow-through is very important in one way or another whether it's your shot in basketball, your throwing motion in baseball or football, or your swing in golf and tennis.  If you don't have proper follow-through, you aren't going to have the success you want.  In the financial markets, one nice day is good, but if there's no follow-through the next day, there is no real direction and it's next to impossible to have an educated guess as to what the market will do, what the trend will be.

From July 29th through September 6th, the mortgage bond market traded in a very tight range and there was never more than two consecutive days of buying or selling during that period and there wasn't a single day of really decisive movement.  Since then, we still haven't had any HUGE days with the biggest day being a down day where the FNMA benchmark bond sold off 36 basis points on September 9th - the 3rd of three consecutive days of selling.  That day was followed by alternating days of buying and selling - one each which was followed by three consecutive days of buying with the third day being the smallest gainer - 1 basis point.  Monday ended that little "rally" with a sell-off of 19 basis points.  Our last three days have been gains of 11 and 16 basis points and we are currently up 27 basis points in our 3rd day.  We have blown through the new (higher) 1st level of resistance (103.65) and are currently 3 basis points above the 2nd level of resistance (103.81) at 103.84.  With this move, the RSI is inching toward the overbought threshold and would probably reach it tomorrow with another day of buying - possibly today if we close up 40+ basis points.

Mixed Data Today
The data was mixed today with Jobless Claims (both Initial and Continuing) coming in better than expected while Existing Home Sales and Leading Economic Indicators came in below expectations with the LEI coming in at -.2  showing more weakness in the economy.

There is no data tomorrow and with a Fed rate increase thought to be pushed back at least until December, I think there a decent chance that traders will continue buying tomorrow unless they decide to take some profits before the weekend.  July 29th also happened to be the last time we had a 4-day winning streak with the selling on July 30th ending that streak.  For now, I would continue to float, but do so with caution.  If you have a loan closing in 15 days or less, lock, otherwise keep an eye on the market so that you can react quickly should the market turn against you.  As always, I'm happy to help in anyway I can; feel free to contact me at 801-893-1737 or 702-812-1214.

Wednesday, September 21, 2016

Mortgage Bond Market Analysis - FOMC Meeting

The Fed interest rate decision has been released and it GOOD news for rates.  With all of the weak data that we've had since the last meeting, it looked for a while like the Fed would likely leave rates unchanged.  In spite of lots of talk immediately after the last meeting that there was a good chance of a rate increase at the September meeting, key economic data beginning the week before jobs week and extending through last week spelled doom for those (the Fed Hawks) who were hoping for a rate hike.

The latest probability from today is that there will be a rate hike in December.  Of course, the actuality of this is predicated on the data and possibly other things like who's elected president.  We'll be hearing from Janet Yellen and her remarks might influence the market a bit more but if what she says is similar to what she's said after recent FOMC meetings, I would expect her comments to have little impact on the market.  The FNMA benchmark bond was about even right before the announcement and is now up 15 basis points at 103.56 - 6 basis points above the 1st level of resistance.  The RSI is also ticking up a bit as you might expect and it is no above the oversold threshold.

I would float for now.  There are a few economic data points tomorrow but I don't think any of them will influence the bond that much.  I'm looking to see how we end the day and if we get any follow-through tomorrow.  Keep a close eye on the market if you float so that you can move quickly to lock if the market moves against you - you can do that with my app (buyerZapp - link in the upper right-hand corner of the blog) or you can always contact me for information - 702-812-1214 or 801-893-1737.  Make it a great day.

Monday, September 12, 2016

Mortgage Bond Market Analysis - Video Monday

Excuse the hair - I just walked in from outside and it was WINDY.  I've got another short video for you today and while there is no data, there is some capitulation going on.  Check out my thoughts and my lock / float recommendation.

Friday, September 9, 2016

Mortgage Bond Market Analysis - It's Friday and it's a video

Here's a quick video where I share my thoughts about what's happening in the mortgage bond market and whether you should lock or float.  Make it a great day and a better weekend.

Thursday, September 8, 2016

Mortgage Bond Market Analysis - Jobless Claims Thursday

Happy Thursday.  Both Initial and Continuing Jobless Claims came in better than expected.  Initial Claims came in at 259K beating estimates of 265K and previous of 263K.  Continuing Claims were 2,144K vs. estimates of 2,153K and previous of 2,151K.  The JOLTS report from yesterday was much better than expected, coming in at 5,871 vs. estimates of 5,643.  Both of these jobs reports are in contrast to the weak jobs data from last week.  Nevertheless, traders decided to sell the FNMA benchmark bond yesterday as it closed down 3 basis points after closing up 41 basis points on Tuesday.  Today the benchmark bond is down again, off 14 basis points at this point in time.

The RSI is just above the mid-point between oversold and overbought and is just a bit closer to the overbought threshold.  We are 13 days away from getting the Fed interest rate decision and with yesterday and today's data, I think traders are a bit more uncertain about what the Fed will do.  I personally don't think an increase is justified based on the recent data we have seen, but there may be enough Fed members who are chomping at the bit to raise the Fed Funds Rate that it gets done in spite of the data.  Of course, we still have a few more data points between now and then but for now, would recommend locking.  I think we are going to stay in the narrow range we have been in and if the Fed decides not to raise the rate, there's a good chance we will see a breakout to the upside with the mortgage bonds and this would be good for mortgage rates.  If the Fed decides to raise the rates, traders will likely decide to sell off, in the short-term anyway, which will be bad for rates.

Make it a great day.

Tuesday, September 6, 2016

Mortgage Bond Market Analysis - More Data for the Fed to Chew On

Happy Tuesday-Monday.  I love long weekends and short weeks.  College football started this last weekend and that was great watching that and seeing some early upsets.  I was also doing my fair share of honey-dos so a productive weekend overall.

On Friday we had weaker data than expected yet the FNMA benchmark bond sold off a bit and closed down 8 basis points at 103.64.  This morning, with more weak data that gives the Fed even more reason to punt (football pun intended) at the September meeting, I would recommend continuing to float.  The ISM Non-manufacturing index came in at 51.4, still expansionary but 4.3 points below the estimates and also somewhat substantially lower than recent months' readings.  Couple this with a weak Non-farm Payrolls number on Friday and the contractionary ISM Manufacturing Index number of Thursday and the data is piling up in support of the Fed leaving rates where they are.

At 103.90, the benchmark bond is currently 11 basis points above the 2nd level of resistance.  The RSI is trending higher and is just a bit above the midpoint in between oversold and overbought so it is not yet a factor.  As for economic data / news that might have an impact on mortgage rates, tomorrow we get the Fed Beige Book at 2:00 pm EDT.  Thursday will bring us the ECB Policy Statement which will give us more insight into Europe's economy and Friday we get Wholesale Inventories.  As I mentioned above, I would float for now but the bond continues to trade in the relatively tight range that it's been in since July 29th.  It needs to break out one way or another and the more data we get that supports the Fed not doing anything in September, the more likely it is that it will break to the upside which means lower rates.  As always, if you are floating, keep a close eye on the market.  You can do that by reading this blog but you can get updates throughout the day by getting my app - buyerZapp - which will provide you with real-time news that impacts rates and gives you a rate-trend meter.  You can get the app by clicking on the link in the upper right-hand corner of the blog.

Make it a great day and a better week.

Friday, September 2, 2016

Mortgage Bond Market Analysis - Friday Follies

Happy Friday.  Well the last of the jobs data came out today and it was a HUGE miss.  Non-farm Payrolls were expected to be 180K but came in at 151K.  This is quite the about-face from last month and from the ADP Private Payrolls on Wednesday.  Additionally, Average Hourly Earnings were only up .1% vs. estimates of .2% and July Factory Orders were up 1.9% vs. estimates of 2% and previous of -1.5%.  The Non-farm Payrolls number does not justify a rate hike this month.  We will have to see how the rest of the data plays out between now and September 21st but if it's anywhere near as tame as this morning's data, I don't see how the Fed could justify raising the Fed Funds Rate.  Let's not forget that the August ISM Manufacturing Index at 49.4 is contractionary which would also be an argument against a rate hike.

Next week we get the ISM Non-manufacturing Index (service sector) on Tuesday which is very important.  The Fed Beige Book is released on Wednesday and Wholesale Inventories is on Friday.  The following Thursday and Friday will give us the PPI and CPI respectively and the Michigan Consumer Sentiment Index.  We should have a really good idea at this point of what the Fed will do the following Wednesday.

Today, however, traders are reacting a bit funny in some ways only because with weak data like this you might think that they would be buying bonds because they could be fairly confident that the Fed is not going to raise rates.  The issue is that money is flowing into the equity markets pushing the stock indices higher and putting some pressure on bond prices with the FNMA benchmark bond now down 13 basis points at 103.59 after closing up 10 basis points yesterday at 103.72.  I would continue to float for now since we might see some buying next week, especially if the data continues to disappoint.  If you have a loan closing within 15 days, go ahead and lock since rates remain at extremely low levels.  Make it a great day and a better weekend.

Thursday, September 1, 2016

Mortgage Bond Market Analysis - Video failed me again

Happy Jobless Claims Thursday.  I recorded a video on my phone yesterday and it still hasn't finished uploading so until I get a good video camera where I can do video the right way, I'll stick to writing these posts - video will come, though, whether you like it or not.  Haha.

Here's a summary of what I recorded yesterday.  The FNMA benchmark bond closed down 16 basis points on Tuesday and another 7 basis points yesterday.  We got our first bit of Jobs data with ADP Private payrolls and it came in at 177K vs. expectations of 175K.  The previous month's numbers were revised upward from 179K to 194K.  This is a decent number but I think bond traders are waiting to see how that translates into non-farm payrolls on Friday.  Other data of note was the Chicago PMI which came in at 51.5 vs. expectations of 54.  On the one hand, that's a pretty big miss but on the other hand, it is still above 50 which is expansionary.  Finally, July Pending Home Sales blew away expectations with an increase of 1.6% vs. expectations of .6%.  As of yesterday, we were still in that tight trading range that we've been in since July 29th albeit toward the lower end of the range.

This morning is a bit of a mixed bag with 2nd quarter Unit Labor Costs rising 4.3% (inflationary) vs. expectations of 2.1%.  Non-farm productivity was down .6% as expected - there's a bit of a correlation here.  The higher the productivity, the more in check the costs of labor.  Here's the biggie for this morning:  August ISM Manufacturing Index came in at...49.4 vs. expectations of 52.  If you've studied economics or if you've read my blog very much, you know that a reading below 50 is contractionary which can hint at a recession and / or be one element that could indicate trouble.  Jobless Claims came in at 263K vs. estimates of 265K so no big news there.  Tomorrow we will get Non-farm Payrolls which are expected to have a much smaller number than last month, the Unemployment Rate, Factory Orders and Average Hourly Earnings.  The big data point for next week is the ISM Non-manufacturing Index on Tuesday but there are some other data points as well.

 The RSI (Relative Strength Index) is just above the midpoint between overbought and oversold.  This is a non-issue at this point.  The FNMA benchmark bond is 16 basis points off its low for the day and sits at 103.66 - up four points since the open.  The focus for traders is still on the FOMC meeting and the Fed Interest Rate Decision announcement on September 21st.  If we see any significant decline in the ISM Non-manufacturing number along with weakness in the jobs numbers on Friday, that might give the Fed pause to raise rates this month and traders might decide to do a bit of buying which would push rates a bit lower.  I'm going to change my stance and recommend floating.  That said, keep a close eye on the market (you can do that with my buyerZapp - link in the upper right corner of the blog) so that if we get data that is bad for rates you can lock quickly and hopefully beat a potential reprice for the worse.

Make it a great day.  College football starts tonight with my alma mater, the University of Utah, taking on SUU in what should be a warm-up game.  Game time can't get here fast enough.

Monday, August 29, 2016

Mortgage Bond Market Analysis - Monday, Monday.

It's Monday and trader's are digesting the news from the Fed Symposium in Jackson Hole.  Let's take a look at some data points:  on Friday, the August Consumer Sentiment Index came in at 89.8 vs. expectations of 90.6; that's the lowest it's been in quite a while.  This morning, we had a gaggle of decently strong data.  July Personal Income was up .4% as expected and Personal Spending also met expectations coming in up .3%.  Core PCE was up 1.6% YOY, also as expected.  While none of these data points from today are incredibly hot, they are all reasonably strong and they certainly indicate economic growth.

Friday, after Janet Yellen's speech, traders got a bit nervous and sold off 21 basis points by the end of the day.  While the FNMA benchmark bond closed 9 basis points above its low, the down day signalled some trepidation regarding the upcoming FOMC meeting in September.  Today, however, is another day and traders are playing it differently with some buying going on as the benchmark bond is currently up 25 basis points to 103.76; that's 4 basis points off its high for the day and 7 basis points above the 2nd level of resistance.  The RSI (Relative Strength Indicator) is approaching the overbought threshold as well.

So what does all of this mean?  I would recommend locking if you or a client / friend have a loan in process that is at a lockable point.  I really don't see enough upside potential to warrant the risk of floating.  I hadn't verified if Jobs week is this week or next week when I did my last MBMA, but it is THIS WEEK.  I rarely like floating into the release of jobs data.  We get the ADP Private Payrolls on Wednesday, Initial and Continuing Jobless Claims on Thursday and Non-farm Payrolls along with the Unemployment Rate on Friday.  Last month, all of these numbers were good.  If we get more strong jobs numbers with other good news from the manufacturing and service sectors, I would not be surprised to see the Fed raise rates in September.  In lieu of a video today, I'll leave you with a pretty picture of the current chart for the mortgage bond market:

As you can see from the chart, the FNMA benchmark bond continues to trade in a very narrow range.  Usually the longer the bond trades in a tight range, the bigger the breakout will be.  The bigger likelihood is for a sell-off which means higher rates and this could very well happen with strong date this week and / or next week as traders would likely anticipate a Fed Funds Rate increase at the September FOMC.  If you do decide to float, please keep a close eye on the market by downloading my app from the link in the upper right hand corner.  Make it a great day and a better week.

Friday, August 26, 2016

Mortgage Bond Market Analysis - 08/25/2016 and I need to shave...

Happy Friday.  I actually recorded the video yesterday afternoon and for some reason it took 14 hours to upload.  In any case, the information is still relevant and I plan to record another video after Janet Yellen's speech today.  Check out this short 2 minute video and feel free to share your thoughts in the comment section.  Make it a great day and a better weekend.

Thursday, August 18, 2016

Mortgage Bond Market Analysis - Some History and Some Prognosticating

It's Jobless Claims Thursday and all the data came in about as expected.  Before I get to the data, I want to talk a bit about recent history and share some thoughts on the not-to-distant future.  In 2015 the Fed ended the Quantitative Easing program where they were purchasing $40-45 BILLION in MBS (mortgage-backed securities) every month.  The law of supply and demand had many experts believing, including myself, that rates would go up since it was inconceivable that all of that buying could be replaced by the world's investors.  The buying that the Fed was doing was helping to keep mortgage bond prices propped up which kept rates low - rates / bond yields move inversely to price, i.e. as prices go up, rates go down.  What we didn't know then is that the rest of the world's economies were so bad and the yields offered on those economies' debt was so low that more investors started channeling money into US debt offerings, including our mortgage backed securities.  While the yields aren't very high, they are higher than about all other 1st world debt and mortgage bonds are considered a safe investment.  Because of this, rates have stayed at or near the levels when the Fed was buying MBS.

Throughout 2015, the Fed hawks grew stronger in their belief that the Fed should begin raising the Fed Funds rate.  They were able to convince enough fellow Fed voting members to raise the rate .25% in December.  Stock market investors immediately reacted with a major sell-off that resulted in a loss of an estimated $3 trillion in wealth to ma and pa investors.  Since then we have seen a lot of mixed data with lots of weakness in the manufacturing sector.  There have also been a few months with weak jobs data and several others that have shown very marginal growth.  The trend in 2016 has shown an economy on the mend, albeit a very slow healing process.  The jobs numbers aren't anywhere close to where they need to be, especially if you look at the labor force participation rate which is still hovering around a 39 year low.  Manufacturing has picked up and has shown more consistent positive numbers.  The non-manufacturing sector (aka service sector) which makes up about 70% of our economy has been very strong.  Inflation isn't a threat - yet - and consumer confidence and spending are not always in line with each other with spending still on the weaker side than it should be for a strong recovery.  What this means is that the Fed has not raised rates since their move last December and while many thought that September would be the next time that it happens, the market is saying otherwise.  I think the Fed is afraid of what might happen in the equities markets if they do raise them and the economic recover really isn't in full swing - they are afraid of another December / January meltdown like what we had eight months ago.  Will they raise rates by the end of the year?  That's anybody's guess but it may depend on who's elected president and the market's thoughts on how the next president will do with the economy.  It will certainly depend on actual results in the data.

For now, the price for the FNMA benchmark bond remains in a tight range and is just 40 basis points below the closing price of July 29th.  That's not a lot of movement and there's not much to suggest a big move one way or the other.  Trading right now is more about short-term profits and trying to be on the right side of the economic data.  Jobs week always has the potential for some big moves since lots of important data is released AND if the jobs data shows much stronger than expected, traders could sell off in a big way.  The first week of September is the next jobs week so until then, I don't anticipate a strong influence on the bond market other than the annual Fed retreat to Jackson Hole, WY.  Fed Chair Janet Yellen will give her opening remarks for the summit tomorrow and, as usual, bond traders will be hanging on every word.  There's a good chance she won't provide any definitive information - probably because they don't have any.  For now the RSI is at the mid-point between overbought and oversold so that's a non-factor.  The current bond price is right around the 25 day moving average and at 103.68, it is one basis point below the 2nd level of resistance.  Initial jobless claims came in slightly better than expected while continuing claims came in slightly worse.  The Philly Fed Manufacturing Index came in exactly as expected.  I would lock if you or a client has a loan in a stage where it can be locked.  I don't see enough upside potential to float.  Going forward, my guess is that rates will remain low for probably a good while.  Make it a great day.

Tuesday, August 16, 2016

Mortgage Bond Market Analysis - What's Happening?

Happy Tuesday.  After being away for about a week and a half, I'm back from vacation and trying to get caught up.  So now let me get you caught up on the economic data and how it's impacting the mortgage bond market.  July Industrial Production came in hotter than expected at .7% vs. estimates of .3%.  Capacity Utilization was also a bit stronger than expectations coming in at 75.9% vs. 75.6% expected.  July Housing Starts came in above estimates at 1.211mil vs. estimates of 1.18mil.  The July Headline CPI came in as expected at 0 while the Core CPI MOM was a bit weaker than expected at .1 vs. estimates of .2.  The YOY was also slightly weaker than expected at 2.2% vs. estimates of 2.3%.  The data overall is fairly strong and has caused the FNMA benchmark bond to sell of 29 basis points from its morning high of 103.79.  The RSI is around the 40 mark - 30 is oversold and could be a signal for traders to buy.  The bond is currently 67 basis points off the July 29th high with a downward trend.  I recommend locking if you are in a position to lock.  Tomorrow we get the Fed Minutes - I doubt there will be any surprise there but you never know.  Thursday will bring us the Philly Fed Manufacturing Survey and the Leading Economic Indicators.

As always, I'm happy to help in any way I can so feel free to contact me at or 702-812-1214 or 801-893-1737.  Make it a great day.

Monday, August 8, 2016

Mortgage Bond Market Analysis - Roller Coaster Ride

Happy Monday.  I'm back to civilization after spending the last 4 days at Panguitch Lake fishing and camping with family and friends.  We got rained on VERY hard on Thursday but had lots of fun and caught lots of fish and ate lots of great food.

With my computer in hand and internet service, I can share the news of what's happening with mortgage bonds.  On Friday, we got the last of the jobs data with July NFP BLOWING away expectations of 180K and coming in at 255K.  June's NFP was revised upward to 292K from 287K and Average Hourly Wages also came in hotter than expected as they were up .3% vs. expectations for an increase of .2%.  This was all negative for pricing and the traders acted accordingly by selling off the FNMA benchmark bond as it closed down 38 basis points for the day, erasing the 35 basis point gain from the prior two days.  If you've read my blog for very long, you know that I typically recommend locking before the beginning of the jobs data (or any other data that could move the market) - this is why.

This morning there is no real data to speak of and the bond was higher by as much as 13 basis points at 103.79, getting above the 1st level of resistance by 4 basis points but has sold off a bit and is now only up 5 basis points for the day at 103.71.  Rates remain fantastic and if you missed your chance to lock before Friday's sell-off, your penalty isn't that bad since you can still lock a fabulous rate.  There's no real reason to float, though it's probably not bad if you aren't in a position to lock or just want to see if you can get a little improvement - the RSI is below the overbought threshold and we did just have a decent sell-off on Friday.  That said, if my loan was ready to lock, I'd lock and not worry about what the market does any more.

This will be my only post for this week since I'll be back on a short vacation with my family starting tomorrow and going through Saturday.  In my absence, you can download buyerZapp which will keep you up to date on economic data and how it's impacting interest rates and you'll also have the interest rate trend meter.  You can get the app by clicking on the link in the upper right hand corner of my blog.  Make it a great day and a better week.  I'll be back next Monday with more information.  

Wednesday, August 3, 2016

Mortgage Bond Market Analysis - It's Wednesday and the beginning of the jobs data

Happy Hump Day.  Wednesday is my favorite day of the week.  My daughter is on a mission for a year and a half and she only gets to write emails on her Preparation Days (P-days).  For now, that's Wednesday so I get to have some communication with her and hear how everything is going (she's going to Tokyo, Japan so it's a tough language to learn.

As for mortgage rates, the ADP Private Payrolls Report came out this morning and it was a bit better than expected at 179K new jobs vs. expectations of 170K.  The ISM Non-Manufacturing Index missed expectations by a bit coming in at 55.6 vs. expectations of 56.  This is still a very strong reading.  However, the FNMA benchmark bond finished up 7 basis points after closing down 21 and 17 basis points on Monday and Tuesday respectively.  The GNMA finished the day up 15 basis points.

The RSI is just above the mid-point between oversold and overbought - it's a wee bit closer to overbought.  at 103.77, the benchmark bond is 2 basis points above the 1st level of resistance.  It was 6 points off the high for the day but 15 points above the low.  We still have plenty of jobs and other economic data this week.  I would lock and be done with it just to be safe.  The bond price is still quite high and traders could look to trim their holdings if the data is strong as today's data suggests it will be.

I'll be out of touch the next three days as I will be fishing in a remote area of Utah (Panguitch).  I'll be out of the office next week on a little family vacation to So. Cal. but I will have access to my computer and phone so I may try to get a post up on Monday and / or Tuesday.  Make it a great day.

Monday, August 1, 2016

Mortgage Bond Market Analysis - The Beginning of Jobs Week

Happy Monday and welcome to Jobs Week.  In my Friday post, I said that I doubt we'd see a big move the rest of the day - the FNMA benchmark bond was up 15 basis points at the time and it end the day up 21 basis points so it squeaked another 6 basis points out for the day.  I also said that I didn't think there was a lot of upside so it's a good time to lock; of course, I'm not a fan of floating into the release of jobs data so there is that peril this week if you / your client isn't locked.  This morning, the bond was down as much as 21 basis points.  We have seen a bit of volatility as it improved through the early part of the morning and was actually up 4 basis points at one point but is now currently down 11 on the day at 103.96 which is 2 basis points below the 2nd level of resistance.  The RSI is just below the overbought threshold so that's a bit of improvement but it's expected with the sell-off.

The July ISM Manufacturing Index came in at 52.6, just below estimates of 53 but still a strong number as any number over 50 is expansionary.  This is a good follow-up from Friday's Chicago PMI data which was quite strong at 55.8 and much better than the expectations of 54.  On the downside (mixed data - go figure), June Construction Spending was - .6% vs. estimates of +.5%.  This is a big miss and helping to support current pricing levels.  Tomorrow we get Personal Income, PCE (Personal Consumption Expenditures) and Personal Spending and then Wednesday / Hump Day get's us started on the jobs data with the ADP Private Payrolls.  We also get the ISM Non-manufacturing Index as well.  With little reason for lots of bond buying, I think the upside is low and thus I would recommend locking.  If jobs numbers are much weaker than expected then we could see some improvement which you might be able to take advantage of with a float down.  That said, with the strong manufacturing numbers that we have had recently, I wouldn't expect the jobs numbers to be weak.  That's all for today; I'll have another report on Wednesday and then I'll be out of town for 10 days - I'll try to get some info out but in my absence, there's buyerZapp that you can download via the link in the upper right-hand corner of my blog.  Make it a great day and a better week.

Friday, July 29, 2016

Mortgage Bond Market Analysis - More Disappointing Data

It's Friday morning, which doesn't mean much for Realtors and loan officers but we do have some economic data to talk about which might influence mortgage rates.  The 2nd quarter GDP came in much lower than expected at 1.2% vs. estimates in the 2.2% - 2.5% range.  On the other hand, the Chicago PMI, which had been weak throughout much of the year until the last couple of data releases, beat expectations with a 55.8 vs. expectations of 54. This will likely off-set any benefit in pricing we would have seen from the low GDP number.  It is also in contrast to the very weak Durable Goods numbers we saw at the beginning of the week which continues to make it difficult to get a reading on when the economy will really get going.  The FNMA benchmark bond is currently up 9 basis points which is 8 basis points off the morning high of 104.03.  The 2nd level of resistance is 103.98 so that held the first time the bond tried to break through.  From another technical standpoint, after closing up the last two days and being up this morning, the RSI (Relative Strength Index) is right at the overbought threshold which could signal traders to take some profits and sell the bond.

The only other data point left for this morning is the University of Michigan's Consumer Sentiment Index which I don't expect to influence pricing too much unless it's a huge miss one way or the other and even then I don't think it will be too big of an influence.  If you've been reading my blog for very long you know that next week is Jobs Week.  We get ADP Private Payrolls on Wednesday which is the first of the jobs data.  That is followed by Jobless Claims on Thursday and Non-farm Payrolls and the Unemployment Rate on Friday.  I will be on a fishing trip in Panguitch, Utah from Thursday through the weekend so I won't be making any posts but you can still get some information regarding mortgage bonds and interest rates by downloading buyerZapp with the link in the upper righthand corner of my blog.  This app will give you a rate trend tool as well as all of the latest news on the economy to help you know whether you or a client should lock or float.  For now, I would say it's o.k. to float BUT I'm really not sure that there's a lot of upside left to this little run unless jobs numbers are really weak nest week and as you may know, I'm not big on floating into that kind of data because if it goes against you, you can really miss out on great current rates.  Hence, locking now and taking advantage of recent gains would be great as you are unlikely to pick up much more benefit anyway.

Finally, the Consumer Sentiment index was just released and the final July reading was 90.0 vs. estimates of 90.5.  This is not a factor in pricing though a final check on the benchmark bond shows it up 15 basis points to 104.01.  Lock those loans and don't worry about anything over the weekend.  Make it a great day and a better weekend.  Contact me if I can help with anything:  702-812-1214, 801-893-1737 or

Wednesday, July 27, 2016

Mortgage Bond Market Analysis - FOMC Wednesday

Happy Hump Day.  I waited to write the post until after the FOMC announcement regarding the Fed Funds rate and it was just released and there were no surprises.  They left the rate right where it is and there was only one dissenting vote.

I wrote in my blog post on Monday that I thought they would leave the rate where it was at least until September's meeting.  Durable Goods Orders came in much weaker than expected at -4.0% vs. estimates of - 1.1%.  Ex-transportation, they were expected to be +.3% but were -.5%.  While we have had a few positives in manufacturing data lately, we have had a lot of negatives and this just adds to the list.  Jobs data also hasn't been nearly as strong as it should be if the economy were really having a strong recovery.  This recovery remains tenuous at best which is why the Fed left the rates as is.  In their comments they said the near-term risk has diminished and the economy is expanding at a moderate rate.

This news along with the weak durable goods numbers this morning is helping the FNMA benchmark bond to reverse course from the last two days.  It is currently up 20 basis points and is bumping up against the 1st level of resistance at 103.63.  No sooner did I write that last sentence but it bumped up another 9 basis points and is now that much above the resistance level at 103.72.  Rates are great so locking isn't a bad thing, especially if you or a client has a loan closing in the near future (15 days or sooner).  However, if the bond closes above the 1st level of resistance, we might get some follow through tomorrow so it might be worth it to float.  If you do float, keep your eye on the bond market - you can use buyerZapp to do this; the link is in the upper right hand corner of my blog - so that you can act quickly if the bond begins to sell off.

That's all for today.  Make it a great day.

Monday, July 25, 2016

Mortgage Bond Market Analysis - The Week Before Jobs Week

Happy Monday.  After spending lots of time in several different gyms watch my son play in two AAU basketball tournaments last week, it's back to a somewhat normal schedule.  The important things are the three things that could impact rates this week aside from any huge geo-political even like a major terrorist attack.  On a side note, it seems that the markets have been shrugging these off lately since they are becoming more normal, unfortunately.  It could be that investors would be selling bonds and pushing rates higher but are nervous about doing this because of the attacks.  At any rate, we have the Fed interest rate decision coming on Wednesday; no movement is expected but experts still believe that the Fed will raise rates at least once this year and some are thinking that September will be when it will begin.  While economic data stateside has been better for the most part, we are still seeing some weakness, especially in manufacturing.  We will get some more manufacturing data this week but the Fed will be watching the initial release of the 2nd quarter GDP which many expect to be over 2.5%.  A reading closer to 2% would leave traders with more questions about when the Fed will raise rates.  Secondary data points that will likely provide some insight as to what the primary data points might be are the Richmond Fed Manufacturing Index, the Chicago PMI, Consumer Confidence, Michigan's Consumer Sentiment, New Home Sales and Durable Goods numbers all come out this week.

The Bank of Japan will announce its interest rate decision on Thursday and it is widely expected that they will lower their rate.  That said, the markets have already been disappointed twice this month when neither the Bank of England or the European Central Bank reduced their rates.  Next week is Jobs Week when we get ADP Private Payrolls on Wednesday followed by Jobless Claims on Thursday and Non-farm Payrolls and the Unemployment Rate on Friday.  Last week the FNMA benchmark bond was down 9 basis points and has basically trended sideways for the last seven days although Friday and today have the bond down 18 basis points so it was up 9 basis points for the previous 5 days.  I think the tendency is for more selling and while I don't expect the Fed's policy statement to have much impact, I do think investors would be influenced to sell if the BOJ doesn't reduce their rates as expected.  The RSI remains oversold so we still have that going for us.  I think it's o.k. to float right now but do so with caution and make sure you have your phone handy and loaded with buyerZapp so that you can stay on top of the market (the link is in the upper right hand corner of my blog).  As always, feel free to call or email me if I can help in any way - 702-812-1214, 801-893-1737 or  Make it a great day and a better week.

Wednesday, July 20, 2016

Mortgage Bond Market Analysis - About Face

Happy Hump Day.  Since my birthday, July 5th, the FNMA benchmark bond has sold off 75 basis points which translates into an uptick in rates by about .125% in rate and .25 points in fee as an approximation.  Things are starting to normalize a bit and we got some good economic data last week.  With the sell-off, the RSI has fallen to below the over-sold threshold.  Tomorrow we get the ECB Policy Statement which should be interesting considering the recent Brexit.  This could be a market mover but my guess is that we will see very little in terms of dynamics and that the content will be more along the lines of how progress is being made and that England will remain a big part of Europe's economy and success - that's just my guess.  If this is what we hear then I expect the markets to trade in business-as-usual fashion.

If there is any concern in the ECB statement, then there would likely be a bit of a move to safe-haven investments (bonds) and we would then see bond prices increase (and rates decrease) as demand for bonds and the resultant buying pushes those prices higher.

Admittedly, I have been a bit absent from blogging lately as I have had a number of family activities that have kept me from it and there are a few more family travel plans that will keep me on the more inactive side of blogging.  That said, there are a couple of ways to stay on top of rates and to know whether you should lock or float:  1) download buyerZapp by clicking on the link in the upper right-hand corner of my blog, or 2) call or email me and I will be happy to give you my lock / float recommendation (702-812-1214, 801-893-1737 or  As for today, I recommend floating but staying close to the app in case any of tomorrow's data or the ECB statement causes investors to sell off.  I'm happy to help in any way I can.  Make today great. 

Thursday, July 7, 2016

Mortgage Bond Market Analysis - Jobless Claims Thursday and the First Jobs Data of the Week

Happy Thursday.  We got some jobs data today and the big jobs data points finish the week tomorrow.  Yesterday we got a very hot ISM Non-manufacturing (Service sector) report that came in at 56.5, well above expectations of 53.3 - a reading over 50 is expansionary.  This morning, Jobless Claims continued its run of a the 4-week moving average being below 270K and this week's reading was 254K, much lower than the estimates of 270K.  Additionally, the ADP Private Payroll data beat expectations as well coming in at 172K vs. estimates of 159K.  Tomorrow we look forward to Non-farm Payrolls (it was extremely weak last month) and the Unemployment Rate.

In spite of the strong data yesterday and today, the market hasn't reacted in a big way as it's probably waiting to see the numbers tomorrow along with Europe still helping to provide support.  Yesterday the FNMA benchmark bond was down 11 basis points, closing at 104.14.  This morning it is up 1 basis point at 104.15, 21 basis points of its low.  Rates are fantastic and I would feel very good about locking now.  My guess is that if tomorrow's jobs numbers are strong, we could see a decent sell-off in the bond market with traders taking some profits on more solid economic news.

I'll be back tomorrow with the news on Friday's data.  Until then, make it a great day.

Friday, July 1, 2016

Mortgage Bond Market Analysis - Long Weekend edition

Happy Friday and Happy Independence Day.  It's been a week since the Brexit vote and while the markets have returned to some normalcy, all of the data we got this week was from before the Brexit vote so traders are trying figure out how much weight to put on the data since things might be different with a major change in the EU.

After a nice follow-through day on Monday where the benchmark bond closed up 39 basis points, it was down slightly (2 basis points) on Tuesday.  Wednesday saw the bond retreat 15 basis points while yesterday the benchmark bond was up 31 basis points.  The economic data has been mixed all week and even data that came in as expected was often lower than the previous month's reading.  Today the bond is currently up 15 basis points but has had a few wild swings with it getting up as much as 30 basis points and then falling to down 5 basis points after the ISM Manufacturing Index came in hotter than expected at 53.2 vs. estimates of 51.4.  This is a solid follow-through from yesterday's Chicago PMI number that was also much hotter than expected at 56.8 vs. expectations of 50.8 and a previous month's contractionary reading of 49.3.  Shortly after the plunge, the bond recovered and was up about 28 basis points again before settling to our current level.

The day's trend overall looks to be sideways and there is a strong resistance at 104 which was tested a bit yesterday and again today and hasn't shown the conviction to break through.  The RSI is above the overbought threshold and is also providing some headwind there as well.  Since last Friday's open, the bond is up 122 basis points which means there is some nice profit available for bond traders who were in last Thursday and sell out today.  Truth be told, many bond traders are in and out of trades multiple times per day doing large volume trades on minimal movement.  As for locking / floating, We are at our highest levels in over a year with great rates - don't be greedy.  I'd lock.  Next week is Jobs Week with lots of important data - it's all pre-Brexit so it won't get as much weight as normal but it's still important.  If you do float, watch the market closely so that you can act quickly - my app (buyerZapp) can help with that.  It's FREE and you can get it by clicking on the link in the upper right-hand corner of my blog.

The bond market is closed on Monday for one of my favorite holidays - Jed's birthday eve.  Actually, Independence day is truly one of my favorite holidays as I have a deep love and respect for our country, the founding fathers and the constitution.  I love our freedoms and don't take them for granted and am very thankful to those who have served and those who do serve in the military to protect us and the freedoms we have.  Have a happy and safe Independence Day.

Monday, June 27, 2016

Mortgage Bond Market Analysis - FOLLOW THROUGH on Brexit

Happy Monday morning.  And if you or your clients are floating, you should be HAPPY.  On Thursday, England voted to take their country back.  They are no longer part of the European Union and part or the reason for that vote was to give them more freedom to enact trade agreements and deregulate the industries that bring in revenues for Great Britain.  I have coached basketball for a long time and one area of expertise that I have is coaching shooting.  There are a lot of things that go into making a good shooter  but one of the most important things other than proper footwork and balance is follow-through.  This is a key concept in many sports, a quarterback has to have good follow-through to make a good throw.  Tennis players and pitchers need good follow-throughs on their swing and pitch, respectively.  Shooters need good follow-through in basketball to be consistent with their shot.  Well, on Friday the FNMA benchmark bond closed up 60 basis points, 29 basis points off its high and 26 basis points below the 2nd level of resistance at 103.24.  This morning we are getting some follow-through (I love it when it comes to mortgage bond buying) as the benchmark bond is up 38 basis points at 103. 62.  Since the close of business on Thursday, this is an improvement to the interest rate of about .25%.  This is awesome and while we may still see more improvement, there would be absolutely nothing wrong with taking your chips off the table, as they say in poker, and locking in your rate.

As I have said many times before, some of the biggest drivers of interest rates are geo-political events.  While economic data, especially key points like the CPI and jobs numbers along with a few others can be big influencing factors for interest rates, big events like England leaving the EU cause enough consternation to get investors to move money from more speculative investments like stocks and commodities to safe-haven investments like bonds.  To make matters even better for mortgage borrowers who are looking to lock, the fact that yields are extremely low (and even negative in a few parts of the world) around the rest of the globe, our bonds are the most attractive of all bonds and the more money flows into our bonds, the lower the rates go.  

We have a fair amount of semi-important economic data this week ahead of jobs week next week (and my birthday on Tuesday) but I think the focus is going to be on Europe.  Another thing to consider from a technical standpoint is that even with the two huge up days of Friday and today, the Relative Strength Index has yet to cross the overbought threshold.  It's knocking on the door but it isn't there yet.  If you decide to continue to float, I would pay special attention to my app - buyerZapp , you can download it by clicking on the link in the upper right hand corner - so that if rates begin to move against you, you can act quickly to lock.  I'm always available and happy to help in any way I can so feel free to contact me.  If you have mortgage insurance on your loan, you may want to see if refinancing makes sense with how low rates are right now.  Contact me at 702-812-1214 or 801-893-1737.  Make it a great day and a better week.

Friday, June 10, 2016

Mortgage Bond Market Analysis - The End of a Quiet Week

It's Friday and the end of a quiet week in the mortgage bond market.  The FNMA benchmark bond is currently down 4 basis points which means it's down 2 basis points for the week.  It was down 14 on Monday, up 6 on Tuesday and 14 on Wednesday and then down 4 yesterday.  In other words, the benchmark bond is trading in a very tight range and hasn't really been able to break out above the 102.79 resistance level.  I think we will continue to remain in this tight range until after the FOMC meeting next week where most experts believe that the Fed will NOT raise rates.  Count me in the camp of those who believe the Fed will postpone a rate increase at least until the end of July and maybe even until September BUT I would hate to be on the wrong side of that bet if you are floating and rates are so great anyway like they are right now.

Yesterday, Jobless Claims came in slightly better than expected and Wholesale Inventories came in much stronger than expected at .6% vs. estimates of .1%.  This morning, the Consumer Sentiment Index came in at 94.3 vs. estimates of 94.  None of this gives bond traders any reason to make a big move (buy or sell) and it certainly doesn't give the Fed reason to raise the Fed Funds rate, especially considering the other data we've seen since the last FOMC meeting.  If you are going to float, make sure you have my app - buyerZapp - which you can download by clicking on the link in the upper right-hand corner of my blog.  The app will help you react quickly to a big sell-off in mortgage bonds that might allow you to lock before a reprice for the worst.

Make it a great day and a better weekend.  If you need me for anything mortgage related - a guideline question, pre-approval or anything else - please feel free to call me; I'm here to help in any way I can.

Wednesday, June 8, 2016

Mortgage Bond Market Analysis - Looking for direction

It's Hump day and a week after jobs week, traders have been tentative to make any big moves.  You may recall (if you read my blog post on Friday) that the Non-farm Payroll numbers were abysmal.  This served to push bond prices higher by 43 basis points.  I said that you may want to float to see if we can get some follow through this week but I also cautioned against greed.  There was a bit of profit taking on Monday with the FNMA benchmark bond finishing down 14 basis points.  Yesterday, it closed up 6 basis points and so far today it is up 14 basis points with a current price of 102.97.  This is testing the highs of the last few months.

The RSI is overbought by quite a bit which means that aside from any big weak economic news or a geopolitical catastrophe, traders may take some profits off the table with no real impetus to push prices higher.  The JOLTS report came out today and was quite strong.  All of the recent jobs reports other than the NFP have been respectable to good.  It's my thought that traders aren't really sure about the job market or the economy right now.  It is quite nebulous and trying to guess what the Fed is going to do next week at the FOMC meeting with regard to the Fed Funds rate is next to impossible.  Tomorrow we have Jobless Claims and Wholesale Inventories and Friday we get the Michigan Consumer Sentiment Index.  I don't anticipate any significant moves in either direction so if there isn't much chance for a big reward if you float AND considering the fact that rates are fantastic right now, I would recommend locking.  Next Wednesday is Fed decision day.  If they decide not to raise interest rates then, the chances increase for a rate hike at the next meeting.  For now, it's a guessing game that I wouldn't want to play with my money.

Make it a great day and contact me if I can help in any way.

Friday, June 3, 2016

Mortgage Bond Market Analysis - Jobs Data Friday

Happy Friday.  There's lots of data so I'll get right to it.  Yesterday, Jobless Claims and ADP Private Payrolls both came in slightly better than expected with Jobless claims coming in slightly lower and ADP Private Payrolls coming in slightly higher.  If you read my blog on a regular basis, especially the coverage of Jobs Week for the first five months of the year, you know that there has been a relatively strong correlation between the ADP Private Payrolls and Non-farm Payrolls.  This time we have done an about face.  May Non-farm payrolls were a HUGE miss coming in at 38K (extremely weak) vs. expectations of 164K.  Here's the really funny thing - the unemployment rate dropped from 4.9% to 4.7%.  If you are thinking clearly your question should be "How is it possible that so few jobs were created yet the unemployment rate was reduced by .2%.  The devil is in the details and the details show that the Labor Force Participation rate dropped from 62.8% to 62.6%.  The population that makes up the Labor Force is the biggest of all data populations for the various jobs data so a .2% drop has a dramatic impact.  The true unemployment rate isn't anywhere close to 4.7%.  In reality, because of an ultra-low labor force participation rate, the unemployment rate is somewhere in the double digits.

May ISM Services came in at 52.9, expansionary but far below the expected 55.5.  Earlier in the week we had a much weaker than expected consumer confidence number as well.  This kind of data will likely give pause to Fed members who are on the fence about raising rates.  The hawks will argue that the key data that justifies a rate increase is there like PCE and CPI while the doves will argue that weak jobs data will lead to less spending and the PCE and CPI will both likely decline over the next few months making a June rate increase unnecessary.  I'm just hypothesizing but this data certainly helps the mortgage interest rate picture today but it muddies the water of a Fed rate increase.

If you have a mortgage that isn't locked, take advantage of today's bad economic news.  You may be o.k. to float to see if the mortgage bond buying has some legs.  On the technical front, the FNMA benchmark bond is at 102.81, 2 basis points above the 2nd level of resistance.  Closing above this resistance level will mean a higher likelihood of a little rally.  The RSI is in overbought territory so there is the possibility that lacking any important data, bond traders might decide it's time to take some money off the table which means they sell, bond prices go down and interest rates move higher.  If you've read my blog for any length of time, you know I'm on the conservative side when it comes to locking and that I don't like to be greedy.  Contact me if I can help with anything - 702-812-1214 or 801-893-1737 or  Make it a great day and a better weekend.

Wednesday, June 1, 2016

Mortgage Bond Market Analysis - Jobs Week

It's Jobs Week.  There is a lot of data to go over to get us back up to speed after me being off-line last week.  Manufacturing data has been (much) weaker than expected recently.  Yesterday the May Chicago PMI came in below expectations at 49.3 vs. estimates of 50.9.  To the contrary, this morning's May ISM Manufacturing report came in at 51.3 vs. expectations of 50.4.  The Prices Paid component jumped to 63.5 vs. estimates of 59.6; both numbers are hot, but the actual number is huge.  This is inflationary and it's the kind of thing that will feed fuel to the fire for those Fed members who want to raise rates at the June meeting.

April Construction Spending came in at -1.8% vs. estimates of +.6%.  A rather large discrepancy.  The May Consumer Confidence came in at 92.6 vs. estimates of 96 - another big miss.  There is a lot of data that still shows the economy is on shaky ground but there is also data that shows we are recovering, even if it is slower than most of us would like.  April Personal Income came in as expected at +.4% but Personal Spending came in at +1% vs. expectations of +.7% - this is a big surprise to the upside and gives more fuel to the "raise the Fed Funds rate" fire.  In spite of the surprise in Personal Spending, the Core PCE remained at 1.6% YOY which provides the "let's keep rates where they are" camp some water to put out the fire.

On May 27th, Janet Yellen said that the economy has picked up it's pace from the slow growth period of the 4th and 1st quarters.  She said that she expects the labor market to continue to tighten and the economy to grow at the rate it has been so far in the 2nd quarter.  She indicated that if this happens, the Fed will be ready to act in the coming months.  So what does this mean (the bond traders hate nebulous messages like this)?  Are they going to raise rates at the June FOMC meeting or not?  Time reveals all answers.

Due to the Memorial Day holiday, the ADP Private Payroll numbers will be released tomorrow with the Jobless Claims numbers instead of the normal Wednesday release.  Expectations are for 180K which is 21K better than last month's disappointing 159K reading.  Non-farm Payrolls, the Unemployment Rate, Factory Orders, ISM Non-manufacturing, and Average Hourly Earnings will be released on Friday.  We will also hear from Mario Draghi of the ECB tomorrow morning - I can't imagine too much good news from his comments as Europe continues to struggle but we could get a surprise.

The FNMA benchmark bond is up 1 basis point at 102.34.  It hit the two resistance levels of 102.45 and 102.53 this morning and got pushed back down.  The RSI is approaching overbought.  The first resistance level of 102.45 is also about what the 25 day moving average is so that makes it stronger.  I'm always cautious when it comes to Jobs week.  If you or a client has a loan that isn't locked, you may want to consider locking ahead of the data.  Make it a great day.

Wednesday, May 18, 2016

Economic data mostly stronger with rates being pushed higher

It's Hump day and the data from yesterday didn't help rates.  Oil is off just a bit this morning but not enough to be much help to bond traders who continue to sell into the release of the FOMC minutes today after stronger data yesterday.  At the current price of 102.25, the FNMA benchmark bond has fallen 50 basis points over the last 3 days.  With oils fast rise, one might think there would be some profit taking at the very least but so far there hasn't been any sign of that.  There has been some disruption in the oil supply chain even though the major oil producers are ramping up production.

Yesterday's data was stronger than expected, for the most part, with April Industrial Production coming in at .7%, more than twice the expected .3%.  Capacity Utilization was also stronger than expected at 75.4% vs. estimates of 75%.  Core CPI (YOY) was 2.1% which met expectations and will give reason for the Fed to consider a rate hike at their June meeting.  Building Permits came in at 1.116mil which was weaker than the expected 1.130mil while Housing Starts came in hot at 1.172mil vs. estimates of 1.127mil.  The April CPI (MOM) was .4% vs. expectations of .3% which adds fuel to the rate increase fire for the June Fed meeting.

The RSI is below the oversold level and there are a few things, as mentioned earlier, that may allow the bond to recover a bit from its current price but I'd lean toward locking just in case, especially if your lender has a float-down option (we do) - a float down on a locked rate is rare because there are a number of stipulations that need to be met but I still think locking today is a good way to go.  In addition to Jobless Claims, tomorrow brings the Philadelphia Fed Manufacturing Survey along with the Leading Economic Indicators.  Make it a great day.

Monday, May 16, 2016

Mortgage Bond Market Analysis - Oil, NY Empire Manufacturing Index and NAHB Housing Market Index

Happy Monday.  We've got three things that are impacting the market and two of the three are impacting the FNMA benchmark bond in a negative way.  Oil continues it's run in spite of increasing supplies and this is having a negative impact.  Conversely, the New York Empire Manufacturing Index missed expectations in a HUGE way, coming in at -9.02 vs. estimates of +6.5 and previous of +9.56.  This is providing a bit of support for the bond while the NAHB Housing Market Index missed its estimates of 59 with a reading of 58 which is the same as last month and still a strong number.  With two of the three things being strong, the benchmark bond is down 12 basis points after being up 16 basis points on Friday.

At 102.60, it is 14 points below the 1st level of resistance and 16 points above the 1st level of support.  The RSI has been very sensitive the last couple of days and is currently hovering just above the midway point between overbought and oversold.  Tomorrow we get Building Permits, Housing Starts and the all important CPI which is expected to be hotter than last month's reading in all four number but one - the YOY ex-Food and Energy - the most important.  Expectations for this are 2.1 vs. previous of 2.2.  Wednesday brings us Capacity Utilization, Industrial Production and the highly important FOMC Minutes where bond traders will be looking for any details that might provide them with a hint of what the Fed might do at the next meeting.  Thursday brings us Jobless Claims, the Philadelphia Fed Manufacturing Survey and Leading Economic Indicators and Friday we get Existing Home Sales.  For now, I'd float with extreme caution - keep an eye on buyerZapp so that you can lock quickly if the market makes a decisive move in the wrong direction.  You can get buyerZapp by clicking on the icon in the upper right corner of my blog.

Based on the news I'm reading regarding oil, I have to believe it is at or near a top.  When traders decide to sell off, this will help rates get even better and they are VERY good right now.  If oil gets back into the $30s, look for a nice improvement in rates, assuming the Fed isn't raising the Fed Funds rate around that same time or that there isn't a lot of other economic data to offset the falling oil prices.  I'm always happy to help with any mortgage-related questions or with a pre-approval.  Make it a great day.

Wednesday, May 11, 2016

Mortgage Bond Market Analysis - No Data Hump Day

The good news is that it's Hump day.  There isn't really any bad news but the fact that we have been in a really tight trading range over the last four days shows that traders are tentative to make a move and are looking for some direction.  Friday the FNMA benchmark bond was down 9 basis points.  Monday it was up five.  Tuesday, it was down six and today, so far, it's up 9 basis points.  It looks like we may be establishing a top to our recent run although, with some luck, it could be a bottom to a new run.  We get a little more data tomorrow and Friday so with a bit of luck, maybe we'll see some decisive moves from the bond traders - the hope would be that they BUY bonds pushing prices up and rates down.

Yesterday's data was stronger than expected with the JOLTS numbers coming in at 5.757mil vs 5.431 expected.  This was a bit of a surprise with a number of companies recently announcing some pretty major layoffs and last week's jobs numbers being much weaker than expected.  Wholesale Inventories came in at .1% vs. expectations of -.1%.  This data is on the expansionary side and is a bit negative for pricing.  With no data this morning, the benchmark bond has recovered yesterday's minor losses in spite of the fact that oil is up somewhat strongly for the 2nd day in a row.

Tomorrow we get Jobless Claims (it is Thursday, after all) and the Import Price Index.  Friday brings us the Producer Price Index, Retail Sales, Business Inventories and the University of Michigan Consumer Sentiment Index.  I will continue with my recommendation to float with my caveat - pay close attention to my app on your smartphone (buyerZapp) - if you don't have it, you can download it by clicking on the link in the upper right corner of my blog.  You will want to be ready to act quickly should the market turn against you.  Contact me if I can help you with a mortgage or any questions regarding mortgages / underwriting guidelines - 702-812-1214 or 801-853-8720.  Make it a great day.

Monday, May 9, 2016

Mortgage Bond Market Analysis - Monday Morning / No Data Edition

It's Monday and we are off to a positive start in the bond market this morning.  There are a number of things that are in play as far as bond traders are concerned.  First of all, the jobs numbers were disappointing last week for the first time this year.  It shouldn't have really surprised anyone considering the fact that a number of big companies recently announced some pretty hefty layoffs.  Maybe the job market and the economy in general isn't improving as much as we hoped.  The other side of that coin is that some of the recent data has shown signs of inflation - this is the main thing the Fed is looking for and it will give them reason to push for an interest rate increase in June.  A soft job market is good for rates and inflation pressures are bad for rates.

Let's add in the element of oil that looks like it might have topped out.  An increase in production is leading analysts to predict oil to fall back into the mid-30s per barrel - it's currently around $44 per barrel right now.  Falling oil prices are good for rates as well.  Then you have the technical side of bond trading where the RSI is above the overbought threshold (bad for rates) and the current bond price of 102.89 is 16 basis points below the 2nd level of resistance but is there an impetus to prices to go higher with the bond already overbought according to the RSI?

Depending on global economic data and, perhaps more importantly, how a softening jobs market impacts the inflation data (this could take a while to trickle through the system), there may be reason for traders to continue buying bonds but the reason may not be very compelling for the near future due to the time it may take for the jobs data to show up in the inflation data.  At the current price, the FNMA benchmark bond is 9 basis points below the closing price of April 11th which was the high close since February 2, 2015 - over a year ago.

I expect Jobless Claims (Thursday) to be higher this week than it has been in recent weeks.  Friday brings us Retail Sales, U of M Consumer Sentiment Index and the Producer Price Index (the start of the inflation data).  Next Tuesday we get CPI - the Fed will be looking closely at this.  There is a fair amount of other important data coming out next week including Housing Starts and Building Permits in addition to Philly Fed Manufacturing Survey, Leading Economic Indicators and Existing Home Sales and we also get the FOMC Minutes on Wednesday.  I would float for now but I'm not sure I would expect much improvement.  If oil sells off, this could help rates but I'm not sure that any of the data points will help much at least until later next week and maybe not until after that.  There's always the peril of a surprise from global news as well.  If you do float, make sure you keep your phone (and my app - buyerZapp) close so that you can act quickly should the market turn against you and you need to lock.  Make it a great day.

Friday, May 6, 2016

Mortgage Bond Market Analysis - the last of the jobs reports

It's Friday of Jobs Week which means Non-farm Payrolls.  We got the NFP data today and as has been the case for the first four months of the year, the ADP Private Payrolls Report on Wednesday was a good indicator of the NFP report today.  At 160K, the NFP were much weaker than the expected 200K.  This is helping to support bonds a bit considering the fact that wages were up 3% (as expected) month over month and they are up 2.5% YOY which is a pretty hot reading.  Add to this the fact that oil is up this morning and it's a good thing that the FNMA benchmark bond is only down 5 basis points.

Yesterday oil was also up but the benchmark bond deviated from the recent patter of selling off when oil is up by closing the day up 31 basis points, 14 points above the 1st level of resistance.  The RSI is well above the overbought threshold so there could be some profit-taking on the horizon unless other factors mitigate that desire.  Next week is light on data until Thursday and Friday.  Traders will be looking for direction from oil and the global economy at least until Thursday.  With the recent run over the last week and a half, the benchmark bond is challenging he high point set on April 11th.  Considering the recently released data points that have shown signs of inflation, I wouldn't be too keen on floating.  I'd take advantage of the great rates we have (FHA rates below 3.5%) and not be greedy.  No real trend has been established today so my expectation is that the bond will close somewhere around the current price of 102.86 - currently down 2 basis points.

Bonus Real Estate Investing Strategy:  Since I always like to add value to clients and Realtor partners whenever I can, I have provided some real estate investing strategies in my blog posts this week.  Today I will give you the final tip in this series.  Keep in mind that there is much more to what I teach than just what I have written about and to invest right requires a team of professionals which includes a CPA to help maximize the tax benefits and an estate planning attorney to set up a trust and the proper business structures like an LLC or Series LLC, depending on your state laws.  In an individual meeting, I can go over the financial part with my spreadsheet so that a client can see how leverage works and when it's the right time to sell an investment property to do a 1031 exchange and buy more property in order to maximize the return on investment.

For now, here's the final strategy.  Purchasing an investment property requires a down payment of 20%.  Or does it?  If you want to buy a move up home, you can do so with as little as 5% down (3.5% if you buy it with an FHA loan but that's not always likely and in most cases a conventional loan is better) and then keep your current home as an investment property.  We may need to get an income property appraisal on the property you keep so that you can get credit for the proper amount of rent.  The 2-in-5 home sale gain exclusion rule may also provide some benefit to people who employ this strategy as long as you've lived in the home for two of the previous five years which means you have to sell the house within three years of moving out.  Contact me to see how all of this works (702-812-1214 or 801-853-8720).  In the meantime - make it a great day and a better weekend.