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Monday, January 4, 2016

Mortgage Bond Market Analysis - First post of 2016 and first data of 2016...

Happy New Year.  It's time to get rolling in 2016.  The first two data points of the year are out and they are both disappointing.  The December ISM Manufacturing Index came in at 48.2 vs. expectations of 49 (which would have been a bad reading anyway).  November Construction Spending came in at -.4% vs. estimates of .5%.  Both readings are very bad and will provide support for our current pricing if not push it higher.  There is some headwind in the form of our 2nd resistance level which is currently at 103.45.  The 50 day moving average is another resistance level and is right around 103.5.  The FNMA benchmark bond is up 23 basis points for the day at 103.41 - 7 basis points off the daily high and 4 basis points below the 2nd level of resistance.

Last Thursday, the bond closed up 26 basis points; when I published my post, it was up 27 basis points and I wrote that I thought it would close right around that level.  I also wrote that it was a possibility for upward movement as traders returned from vacation and volume picked up with them trading on the recent disappointing data.  This has happened so far this morning.  Finally, I recommended locking before the employment data, especially Friday's unemployment rate and non-farm payroll data.  Data is very light tomorrow with Total Auto Sales coming out at 4:00 EST.  Wednesday we get some important data with the ISM non-manufacturing index, factory orders, FOMC Minutes and the first of our employment data with the ADP Private Payroll change.  I'm taking my daughter (she starts her 2nd semester of college next week) skiing on Wednesday so I probably won't have a post on Wednesday's news until Thursday which will also include Jobless Claims.

I'm always available to help with anything mortgage-related.  Feel free to contact me at 702-812-1214 or 801-853-8720 or by email at jed.wunderli@noblehomeloans.com.  Make it a great day and an awesome year.

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