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Monday, February 29, 2016

Mortgage Bond Market Analysis - Bonus Day

Happy Monday and Happy Bonus Day.  It's February 29th which only happens once every four years.  What are you doing with your "extra" day this leap year?  Since we don't get it off, I'm doing my normal stuff - providing you with information regarding economic data and how it impacts mortgage rates.  On Friday, all of the data points surprised to the upside and with oil up a tad, mortgage bonds sold off.  At the time I wrote my post, the FNMA benchmark bond was off 28 basis points and I said that I thought they would close about where they were; the bond ended up closing two basis points above that level, down 26 basis points on the day at 102.37.

Jobs Week - As I mentioned last week, it's Jobs Week just like every first week of the month.  This morning the two data points missed the mark with the Chicago PMI falling back below the 50 mark at 47.6 vs. estimates of 52 and previous of 55.6 - remember that a reading below 50 means contraction.  Pending Home Sales also missed the mark in a big way with a reading of -2.5 vs. estimates of .5 and previous of .1.  The fact that oil is up a bit today is helping to keep bonds in check as the FNMA benchmark bond is only up 14 basis points at 102.51, 7 basis points above the 1st level of resistance and 27 basis points below the 2nd level.  The RSI is just above the mid-point between overbought and oversold.

Tomorrow's data and going forward - The ISM Manufacturing Index is expected to come in at 49 with a previous reading of 48.2.  Construction Spending is estimated at .5 with a previous reading of .5.  Wednesday we get the first of the jobs reports with the ADP Private Payrolls report.  Based on Friday's data, I expected that we might get some good jobs numbers but the data this morning gives me some pause.  Thursday we get Jobless Claims, just like every week, along with Non-farm productivity, ISM Non-manufacturing Index, Factory Orders and Unit Labor Costs.  Friday is the biggie with Non-farm Payrolls and the Unemployment Rate.  The bond is now up 18 basis points at 102.55 and the trend from the opening is higher.  I would float with caution and keep an eye on the bond market by downloading my buyerZapp - link in the top right corner of my blog.  I will send alerts with any major changes that could adversely affect interest rates.  Make it a great it a great day and don't forget to "Jump" for leap day.


Friday, February 26, 2016

Mortgage Bond Market Analysis - TGIF

It's Friday.  It's also my son's 15th birthday - he's such a good young man.  I'm very proud of him for so many reasons.  Thankfully it is also the last day of a capitulating week for the bond market.  Oil's up a bit today which means the bond market is down but that's not the only reason it's down.  Every data point today surprised to the upside with the 1st revision of 4th quarter GDP coming in at 1.0% vs. estimates of .4% - while this still doesn't show inflation nor does it show anywhere near the growth we need to be at as a country, it's still a lot hotter than expected.  Personal Spending came in at .5% vs. estimates of .3%.  Core PCE YOY (Personal Consumption Expenditures) came in at 1.7% vs. 1.2%.  Finally, February Consumer Sentiment came in at 91.7% vs. estimates of 91%.

The combination of the hotter-than-expected data to go with oil being up a tad is causing the FNMA benchmark bond to sell off.  It is currently down 28 basis points at 102.35.  It is 9 basis points off the morning low and the RSI is smack dab in the middle of overbought and oversold so that is a non-factor.  The bond is 13 basis points above the 1st support level of 102.22 - my guess is that we close above this level; the chart shows the trend to be relatively horizontal from this point with a slight downward move.  Unless something big happens, I expect we will close very close to the current price.  The damage has been done today; we also have the support of the 25 day moving average which happens to be about where the 1st support level is which makes that support very strong.  With some improved data today, next week could be bad for bonds and rates if we see more data surprising to the upside and next week is Jobs week so that is something to watch closely.  If you need to lock, lock - protect yourself from anymore downside risk.  I wouldn't float past Tuesday unless something changes - like a big geo-political event or oil tanks a bunch more.  I think I would float at least until Monday just to see if oil can provide a lift on Monday - at least for clients who don't have loans closing very soon.  I'll send out alerts via my app, (buyerZapp) which you can download via the link in the top right corner of my blog, in case the bond market decides to sell off a bunch more causing rates to move up.  Early this week I sent an alert that gave people time to lock before a reprice for the worse so take advantage of what the app has to offer.

I'm available over the weekend if you or a client needs help with an approval or a mortgage-related question - 702-812-1214, 801-853-8720.  Make it a great day and a better weekend.

In case the above news made you a little sad or depressed, here's some cute babies and puppies to put a smile on your face.

Thursday, February 25, 2016

Mortgage Bond Market Analysis - Jobless Claims Thursday

It's Jobless Claims Thursday but Oil and Durable Goods Orders are the headline acts.  Yesterday I recommended floating but to keep a watchful eye on the market so that you could act quickly in case the market moved against you.  I also said that a great way to do that is to download my app from the top right side of my blog (buyerZapp).  Well sure as shootin' the market deteriorated and I sent out an alert to lock and about .5 - one hour later, the market had a re-price for the worse.  If you downloaded my app, you would have gotten my alert and you could have locked ahead of the reprice.  That's what I do for my clients.

So what's happening today?  Oil is down - not a whole lot, but it's down and this is what's keeping bonds from heading south after some very strong and surprising Durable Goods Orders numbers.  January's Headline Durable Goods Orders came in at 4.9% vs. 2.5% expected.  Ex-transportation, they were 1.8% vs. .2%.  These are strong and they bode well for manufacturing.  Jobless Claims were basically in line with expectations, coming in at 272K vs. 270K expected.  Continuing claims came in slightly lower at 2.253M vs. expectations of 2.260M.  These numbers are a non-factor in mortgage bond pricing this morning.

The FNMA benchmark bond closed down 14 basis points, 9 basis points off the low.  This morning, it is currently up 14 basis points so if you didn't lock yesterday when I called out the alert, oil is saving your bacon (not to be confused with the commodities in the futures market - a little Trading Places reference).  Tomorrow's economic data includes GDP (annualized) and the Michigan Consumer Sentiment Index.  I'll give the same recommendation today that I gave yesterday morning:  float with caution (if you / your client's transaction is closing 15+ days out) and keep a close eye on the market, i.e. download my app so that you can get alerts if the market moves against you.  You will also get a handy mortgage calculator (they are working on updating it with a few of my recommendations) and important news about real estate and the financial markets that may impact mortgage rates.

I'm always available to help with questions or a mortgage approval.  Make it a great day.

Wednesday, February 24, 2016

Mortgage Bond Market Analysis - Hump Day and Oil

Happy Hump Day.  With no surprise, bond trading today is being highly influenced by oil.  News from Saudi Arabia is that they aren't going to freeze production so oil is down big this morning as is the stock market which means money is flowing into bonds.  Yesterday bonds were down as much as 31 basis points thanks to existing home sales that came in at 5.47mil vs. 5.32mil expected.  The Richmond Fed Manufacturing index helped provide a bottom and give a bit of a lift coming in at -4 vs. estimates of +2.  What really turned things around for the FNMA benchmark bond yesterday, though, was February Consumer Confidence with a big miss at 92.2 vs. estimates of 97.  The bond closed up 13 basis points at 102.60 - 8 basis points above the 1st level of resistance.  The oil sell-off and more weak economic news is helping to push bond prices even higher this morning.

January New Home Sales came in at 494K vs. expectations of 520K and previous of 544K.  While this is a big miss and is in lock-step with the consumer confidence number, it's not really a factor in bond prices.  Currently, the FNMA bond is up 15 basis points at 102.75, 12 basis points off the morning high and 3 basis points below the 2nd level of resistance.  The RSI is about smack dab in the middle between the overbought and oversold thresholds so it's a non-factor.  Tomorrow is Jobless Claims Thursday and it's also likely to be a non-factor as well.  Over the last 2+ weeks the bond has been in a very narrow range with no real impetus to break out one way or the other.  Oil doesn't have a lot of room to move to the down side which would benefit bonds.  The likelihood of more weak data means that downside risk isn't huge either.  If you (borrower / Realtor with a buyer / borrower) can keep a close eye on the mortgage bond market so that you can act quickly, I recommend floating if your transaction is closing 15+ days out; if it's closing sooner than that, take advantage of the gains from yesterday and today to lock.  You can get my intraday alerts (if there's any big movements in the market during the day) by downloading my app (buyerZapp) - the link is in the upper right corner of my blog.

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

I think this guy is creative and entertaining - enjoy it:

Monday, February 22, 2016

Mortgage Bond Market Analysis - Monday, Monday.

It's quiet on the bond front this morning after the weekend.  I hope you had a great one - my alma mater, the University of Utah, won both of their road games against UCLA and USC over the weekend.  Things are looking good with them as they prepare for the PAC 12 tournament and ultimately the NCAA tourney - March Madness is my favorite time of year for sports.

As for mortgage bonds, on Friday I wrote that I though bonds might trade in a tight range until something gives them the impetus to break out.  There's no data today so no jump start exists there.  Oil is up strong today which is providing a boost to the stock market and bonds are off because of it - the FNMA benchmark bond is down 4 basis points as I write this.  The RSI is a bit closer to oversold than overbought.  At 102.46, the bond is 33 basis points above the 1st level of support so if traders decide to sell, there's a bit of a fall before it hits the support level.  While we have some data this week, it is on the light side and nothing that is likely to move the market.

Next week is Jobs Week with ADP Private Payrolls on Wednesday, Jobless Claims Thursday (like every Thursday) and Non-farm Payrolls and the Unemployment Rate on Friday.  There is other important data as well and traders will be looking to see what they should do based on this data.  For now, float with extreme caution.  If you are working with a loan officer who either doesn't give bond market / interest rate updates, then download my app in the upper right of my blog to receive general rate alerts as well as specific rate alerts direct from me.  You can also call or email as well - 702-812-1214, 801-853-8720 or  Make it a great day and a better week.

Friday, February 19, 2016

Mortgage Bond Market Analysis - It's Friday

Happy Friday - I love short weeks.  We've seen a fair amount of capitulation in the mortgage bond market this week as the economy continues to show weakness while a few economic data points did surprise and influence bond prices, oil is the major dictator right now.  This morning, the CPI numbers were better than expected with the January Headline CPI MOM coming in at 0 vs. estimates of -.1 - certainly not blistering but better than expected like I said.  Additionally, the core CPI MOM came in at .3 vs. expectations of .2.  Core CPI YOY was 2.2 vs. estimates of 2.1.  This is negative for bond prices but while bonds have retreated from this morning's highs, the sell-off could be worse if it weren't for oil being down 4.5%.  Currently the FNMA benchmark bond is at 102.36, 36 basis points off the high and 10 basis below the 1st level of support.  Yesterday the bond closed up 35 basis points.

Any day I don't write a blog post, you can get interest rate information by downloading my app (buyerZapp) which is available in the sidebar of my blog.  It has a great mortgage calculator for buyers to see what their payment will be on homes they like.  You can also set your alerts so that you will be notified when the market moves a given amount in one direction or the other.  Additionally it has great links to current real estate news.  Check it out and let me know what you think.  As for my recommendation about locking / floating...I would lock.  I believe there is still more risk to the down side than there is reward for a possible upside movement though it's also very possible that the trading range is very narrow since it is unlikely oil will go much lower or that we get strong enough economic data for bond traders to sell in a big way.  The fact is that rates are great and locking now isn't a bad thing.  Make it a great day and a better weekend.  I'm available for any mortgage questions or pre-approvals over the weekend.

Wednesday, February 17, 2016

Mortgage Bond Market Analysis - Hump Day and some Tug of War

It's Hump day... and it's a bit later than I normally write my post.  I wanted to wait until the Fed minutes were out to see how that would impact the market.  I did recommend locking yesterday in my post so if you read that and followed through, you were covered.  Let's take a look at the data from this morning.  The Producer Price Index (PPI) Ex-Food and Energy YOY came in at .6 vs. estimates of .4 and previous of .3.  The month over month number came in at .4 vs. estimates and previous of .1.  The MOM PPI including food and energy came in at .1 vs. estimates and previous of -.2.  While the numbers were hotter than expected and will put some pressure on pricing, they are still low and show no real threat of inflation, especially considering the fact that the Fed's target is 2.0.

Building Permits came in at 1,202 vs. estimates of ,1200 and previous of 1,204 - not a big deal here.  Housing Starts were a big miss at 1,099 vs. estimates of 1,171 and previous of 1,149.  Neither of these data points are much of a factor in bond pricing.  Industrial Production was up to .9 vs. estimates of .4 and previous of -.4.  Finally, Capacity Utilization was also up a tad as you might expect at 77.1 vs. estimates of 76.6 and previous of 76.5.  This is not much of a factor on bond prices.
This morning, the FNMA benchmark bond was down as much as 31 basis points (currently down 19) and the biggest influencing factor was probably the fact that oil was surging after Iran said that it likes the idea of a freeze.  The stock market has been moving in lock step with oil; the Dow and S & P are currently up around 1.5% while the NASDAQ is up over 2%.  The Fed minutes are helping the bond off its low as there was obvious concern about the ability of the US economy to perform well with the various global challenges that exist contrary to comments made by Janet Yellen recently.  Here's a tidbit from the minutes:

WASHINGTON (AP) -- Federal Reserve policymakers expressed growing concerns at their meeting last month about potential threats to the U.S. economy, including turbulence in financial markets, plunging oil prices and slowing growth in China and other emerging markets.

NEW TOOL:  If you have read my blog at all, you know that I try to add value to my mortgage clients and Realtor partners.  I have an additional way of doing this now with a new app that you can download.  This application will allow buyers to calculate their mortgage payment including mortgage insurance, property taxes, homeowner's insurance and HOA (if applicable).  Additionally, the app alerts the user about rate changes and provides a general trend of rates.  It also provides news stories regarding real estate so the buyer can be as informed as possible.  The app is also sharable so buyers that have friends who are buying or Realtors can share the app with anyone else who needs it.  Finally, it's like a bat-line to me - if the user has any questions at all, the app makes it really easy to get in touch with me.  Check it out and enjoy:  buyerZapp.

Tuesday, February 16, 2016

Mortgage Bond Market Analysis - Tuesday / Monday edition

It's Tuesday morning after a long weekend and the bond market is off to a lethargic start to the week.  After closing down 46 basis points on Friday, the FNMA benchmark bond is trading in a tight range this morning and is currently down 3 basis points.  At 102.29, it's 17 basis points below the first level of resistance and 29 basis points above the first support level.  The RSI is just above the midpoint between overbought and oversold so that's not a factor at this point.  As for economic data this morning, the NY Empire Manufacturing Index came in at -16.64 (another weak manufacturing reading) vs. expectations of -9.9 and previous of -19.4 - so at least it was a bit better than the previous reading.  The NAHB was good with a reading of 58 albeit below expectations of 60 and the previous reading of 61.

Everything is still about oil and four producers have agreed on a freeze but objected to it.  If oil moves higher, that could help the stock market and if we can get some bit of a true economic recovery with jobs and consumer spending, then there might be a real reason for the Fed to raise rates.  For now, Nobel Lauriate Maskin doesn't think there is any reason for the Fed to raise rates; check out the article here:  the Fed shouldn't be raising rates.

Tomorrow we get the PPI which I think will be tame as far as inflation is concerned.  We also get Housing Starts, Building Permits, Industrial Production and Capacity Utilization in the morning along with the FOMC minutes in the afternoon.  I don't think any of these will be big market movers but I would still lock if you have a loan process just because there's too much risk without enough reward to float.  I hope your weekend was great and your week ahead will be fabulous  I'm available if you or a friend / client has questions about mortgages or needs a pre-approval:  702-812-1214, 801-853-8720 or

Friday, February 12, 2016

Mortgage Bond Market Analysis - Please keep your arms and legs in the ride at all times

Well TGIF.  It's been a bit of a roller coaster or at least Mr. Toads Wild Ride this week.  Yesterday I said to float but to keep a close eye on the market.  For the most part the FNMA benchmark bond capitulated between up 30ish to up 50ish throughout the day until the slide at the end when it finished up 5 for the day - 61 basis points off its high.  This morning we got a bit of data that surprised to the upside and is pressuring bonds such that the benchmark bond is currently down 36 basis points - a 102 basis point swing from yesterday morning's high.  This is huge.

If you were floating, I hope your loan officer was on top of what was happening in the market so that you were able to lock.  I saw it slipping away yesterday afternoon and got lock alerts from both services I subscribe to so I made sure my clients who were in a position to lock did so.  As far as data is concerned, Retail sales came in at .2 vs. estimates of .1 - here's my "fun with statistics" math:  it was 100% higher than expected; of course it also only beat it by .1% in terms of an absolute number.  Ex-autos, the number was .1 vs. expectations of 0.  While it is a victory, it's more of a moral victory - it's still a very weak number.  The preliminary February Consumer Sentiment number was disappointing, coming in at 90.7 vs. estimates of 93.  Finally, Business Inventories were also a positive with a reading of .1 vs. estimates of 0.

Rates really are still great and locking now to protect from any further down side isn't a bad thing.  That said, the bond is bouncing off the 1st support level at 102.42 and is currently at 102.45, down 33 basis points.  The RSI is right at the overbought threshold.  The big reason why we are down today is the fact that oil is up over 5% this morning which is providing support for the stock markets after a bad week.  The fact that we had a few data points come in stronger than expected is adding to the sell-off.  That's all for this week.  Monday is a holiday so have a fantastic weekend.  I'm available if you or a client needs a pre-approval - 702-812-1214, 801-853-8720 or  Make it a great day and a better weekend.

Thursday, February 11, 2016

Mortgage Bond Market Analysis - Jobless Claims Thursday and BOOM!!

Happy Thursday.  At least for some.  The stock markets in Europe were all down with bank stocks leading the way.  There is concern that some banks may not be able to withstand the challenges of a global slowdown - especially those banks who still have an inordinately large amount of bad debt on their books.  Shares of Societe Generale (a major bank in France) warned it would miss it's long held profitability target and is down 13%.  Two banks in Greece are down 23% and 16% while a bank in Italy is down 9% and Credit Suisse is down 8%.  Naturally this is having an impact on the US markets as the Dow, NASDAQ and S & P are all down this morning and the bond markets are virtually ignoring good economic date as the flight to quality reigns supreme.

The FNMA benchmark bond shot straight up out of the gate and was up 66 basis points before selling off to 102.95 (+22 basis points) but has now climbed back up to 103.22 - up 49 basis points on the day (17 basis points off the morning high).  Yellen will likely not say anything new from her testimony yesterday (which is widely regarded as being the reason for the sell off today) so the next influencing factor on the market will probably come tomorrow.  I don't expect the market to turn around and be all rosy tomorrow so I recommend floating.  Always keep a sharp eye on mortgage bonds in case there's a sell-off so that you don't lose all your gains but for now there's a possibility for even more gains.

The market didn't like Yellen's prognosis of a slowing global economy and the fact that the Fed is contemplating not raising rates is proof of their belief.  However, they aren't doing anything constructive (lowering rates or QE4) to buoy up the markets - not that I'm a fan of another quantitative easing (see my post from yesterday).  We need a real recovery and that has yet to happen and the economic data tells that story in spades.  Call me if I can help with a pre-approval or any other mortgage questions - 702-812-1214, 801-853-8720 or  Make it a great day.

Wednesday, February 10, 2016

Mortgage Bond Market Analysis - Hump Day and Yellen and a look at the chart

It's Hump Day and we get to hear from Fed Chief, Janet Yellen.  Since December 30th's open, the FNMA benchmark bond (which was the 3.5 back then but has switched to the 3.0 since, indicative of falling rates) has gone up 308 basis points (today's monthly rollover aside).  Between oil prices that are well below where the market would like to see them (the glut is the major cause while economic weakness isn't helping), key economic data that has been very weak for far too long and global economic weakness, stocks have been crushed (my kids' college funds have taken a real beating) but at least bond prices, and by default, mortgage rates have benefited.  Let's take a look at the chart.

One thing that stands out is the huge and almost straight run-up with just a few minor setbacks.  From a technical standpoint, there is a lot of resistance to move higher with the RSI still above the overbought line and the 1st resistance level just a few basis points above the current price and the 2nd resistance level just 25 basis points above that.  Certainly some bond traders are getting anxious to pull some profits off the table as well.  That said, Yellen said that global economic weakness pose risks (this comment is good for bond pricing and interest rates) but that she thinks the US will motor through (this comment is not so good).  The bond traders and the equity markets are paying more attention to the first part of her comment as the bond has improved since her comments while the stock market as sold off.

Tomorrow we get Jobless Claims and Part 2 of Janet Yellen.  Friday brings some important and / or interesting data with Retail Sales, Import Price Index, Business Inventories and the Michigan Consumer Sentiment Index.  I would continue to float if you or a client has a loan closing 15+ days out.  If the closing time is less, take advantage of the great run-up and lock that rate.  If you float, make sure you keep a watchful eye on the market just in case there is a rapid move against you.  I'm always available to help with anything mortgage related - 702-812-1214, 8801-853-8720 or  Make it a great day.

Monday, February 8, 2016

Mortgage Bond Market Analysis - It's all about the oil, baby

It's Monday Morning after the Super Bowl and the financial markets are trying to grab all of the headlines.  I didn't have a dog in the fight yesterday so I enjoyed the game - two good defenses slugging it out with Denver's being dominant.  Von Miller was amazing and won the MVP as he should have.  I also really liked Lady Gaga's performance of the National Anthem.  But this blog is about the mortgage bond market so let's get to it.

The last couple of weeks has been all about the price of oil with regard to the mortgage bond market and the resulting interest rates along with a bit of attention being given to some economic data points.  Oil is down enough this morning to throw the stock market into a tizzy fit which is good news for mortgage bonds.  All three major US stock indices are down over 2% with the NASDAQ down 2.86% - in case you're wondering, this is big.  As a result, investors are buying gold and bonds and the FNMA benchmark bond is up 34 basis points to 102.58 - five basis points above the 2nd level of resistance.  The RSI remains in overbought territory so between these two things there is headwind but as long as oil remains low (or moves lower) and as long as the economic data is weak, bonds will be a good investment.

The Labor Market Conditions Index came in at .4 vs. previous of 2.9.  Not a big market mover as far as economic data is concerned.  Tomorrow we get wholesale inventories and JOLTS.  Wednesday we get comments from Janet Yellin which may impact the market - in either direction - depending on what she says.  We also have a 3 year bond auction tomorrow and a 10 year auction on Wednesday so bond traders will be looking to see how they are absorbed into the market.  With the move this morning, it's a great time to lock in gains.  However, it may not be a bad idea to float through tomorrow afternoon as long as you keep a close eye on the market so that you can lock quickly in case things turn against you.

Contact me if I can help with anything mortgage-related - 702-812-1214, 801-853-8720 or  Make it a great day and a better week.

EDIT:  Back to the Super Bowl - my top 3 commercials were:

  1. Dorito's Baby commercial
  2. Hyundai First Date commercial
  3. Toyota Prius commercial
Honorable mention:  Marmot.

Friday, February 5, 2016

Mortgage Bond Market Analysis - Non-farm Payrolls and Unemployment Rate

Happy Friday.  We've got some important data that was released this morning so let's dive right in and take a look at how it came in.  Non-farm Payrolls came in rather light at 151K vs. estimates of 190K and previous of 262K (this was revised down 30K from the initial reading of 30K - how do they get this number wrong?  Do companies say "Oops, we decided not to offer these jobs after all?).  With a weak number like this, you might expect bonds to be rallying, right?  Well somehow the unemployment rate went down from 5.0 to 4.9% but that's not a big deal because traders are smart enough to know that the employment situation isn't nearly as good as that number would have you believe, especially considering the NFP number.  They know that the real reason why the unemployment rate dropped is because a number of people dropped out of the work force and "stopped" looking for work and are no longer on the unemployment rolls.  I can't wait to see what the Labor Force Participation Rate looks like later this month.

Bonds are down 18 basis points right now after closing down 13 basis points on Wednesday but up 12 yesterday.  The reason for the decline is probably due to the increase in the Average Hourly Wage to .5 vs. estimates of .3 and previous of 0.  This is likely due to the fact that most of the recent new jobs have come in the 25-54 age range that pays a higher wage relative to those in the 16-19 age range that were the bulk of the creation recently.  This wage inflation, like any inflation, scares the bond market and is the likely culprit of the sell-off.  The FNMA 3.0 benchmark bond is up 258 basis points from December 30th's open which means rates are better by about .5 - .625%.  The chart shows that we are at the top of the range and that we are overbought so there are some technical reasons to look for some profit taking.  If oil pushes higher, look for bonds to sell off more but if oil drops, bonds could benefit.  Other than that or some global instability, I don't see rates getting any better.  Some experts are recommending floating and while it doesn't look like there's much harm in doing that, I'm not sure there's much to gain either.   Data next week is light, at least at the beginning, so we may get lucky and see some more buying which would be beneficial for rates.  However, considering the fact that we are very near the top of a 1+ month run, I would lock and float down if you get that lucky.

Contact me if I can help with anything mortgage related - I'm available over the weekend if you need a quick pre-approval - 702-812-1214, 801-853-8720 or  Make it a great day and a better weekend.

EDIT:  Initial Jobless Claims, released yesterday, came in at 285K vs. expectations of 280K and previous of 278K.

Wednesday, February 3, 2016

Mortgage Bond Market Analysis - Hump Day and Kick-off of Jobs Data

Happy Hump day.  Don't be too surprised but we have some mixed data today.  January Private Payrolls came in at 205K vs. estimates of 195K - negative for rates.  Additionally, December's number was revised up to 267K from 257K - also negative for rates.  The January Non-manufacturing Index (service sector) came in at 53.5 vs. estimates of 55.1 - lower than estimates but still expansionary as it's above the critical 50 threshold.  December's number was revised up from 55.3 to 55.8.  The fact that the number was lower than last month's (somewhat considerably) and it missed the estimate is positive for pricing but since it was still solidly above the 50 threshold, traders may not be in too much of a buying mood considering that the service sector is about 80% of our economy and this reading is still good news.

On Monday, I recommended locking before today.  We had a nice move up yesterday with the FNMA benchmark bond up 30 basis points, closing at 104.88.  With such a high price, this morning the benchmark bond was changed to the FNMA 3.0 vs. the 3.5 which it has been for quite some time.  The new benchmark bond is up 3 basis points on the day but has capitulated throughout the morning, starting off down, then moving considerably higher and is now back to slightly up for the day.  It is currently 9 basis points above the 1st level of resistance and 13 points below the 2nd level.  The RSI is also overbought.  I believe there are two things continuing to drive the upward movement in bonds:  1) low oil prices and 2) the belief that the Fed may not raise rates as quickly as they said in their December meeting; the market seems to be pricing in no more rate increases this year which is a 180 degree turn-about from December when the Fed was talking about an increase in 2016 of as much as 1.375%.  There's not a lot of data tomorrow that's likely to move the market - Jobless Claims haven't been that impactful lately and the other data points aren't rate drivers.  Friday will have some important stuff to watch out for.  Like on Monday, I think it's o.k. to float but I'm not sure there much upside to be had so locking now allows you to take advantage of great rates and protect yourself against a sell-off in case Friday's numbers are better than expect or oil moves higher.  

If you read my blog regularly, you may know that I have a variety of spreadsheets to help people on a wide variety of topics from understanding the benefits of real estate investing to financial concepts such as time-value of money and why you should put less money down (to a point) and invest the rest (don't put 50% down, put 20% down and invest the other 30%).  I just finished updating my Rent vs. Own spreadsheet that details the benefits of homeownership from a financial perspective.  I'm happy to personally review these with you so that you can see how it impacts your specific situation or if you would like a copy of the spreadsheet, contact me at 702-812-1214, 801-853-8720 or   Make it a great day.

Monday, February 1, 2016

Mortgage Bond Market Analysis - Mixed (Weak) Data Monday

Happy Monday.  We have a few data points to start what will be a big week with Jobs data being the focus.  Last week I wrote (as I've done several times over the last year) about how the consumer confidence levels are all very high especially when you consider that the economy is still very weak and consumer spending isn't happening.  Usually when consumers are confident, they show it by spending.  Well Personal Income was at .3 for December, in line with the previous reading and higher than expectations (.2).  The problem is that in spite of a bit more income and a high level of consumer confidence, Personal Expenditures were 0 vs. expectations of .2 and previous of .3.  Core Personal Consumption Expenditures were also 0 vs. expectations and previous of .1.  The ISM Manufacturing Index came in at 48.2, .2 above expectations but any reading below 50 is contractionary so this is not good.  On Wednesday, in addition to ADP Private Payrolls, we get the ISM Non-manufacturing Index which has been above 55 the last few readings and is expected at 55 this time.  The service sector is our greatest employment sector by far in the US so we need strong readings here.

From a technical standpoint the FNMA benchmark bond is 10 basis points below the 2nd resistance level of 104.67.  The RSI is overbought as you might expect after last week's run of 5 consecutive days in the green.  Oil is still the driver and both the stock and bond markets are taking their cues from what oil is doing.  Oil is down today and both the stock and bond markets are down, though the stock market is getting hit harder.  Typically with data like we got and oil being down, we might expect bonds to be up but there is probably some profit-taking going on.  T. Boone Pickens thinks that oil hit its bottom at $26.15 per barrel and said that based on past history, he thinks it's very possible that oil will double in the next 12 months.  Additionally, some experts in the financial markets are saying that we may not get another rate hike until 2017 because of the economy.  If the Fed stands pat for the rest of the year, that will help keep mortgage rates low but if oil rises like Picken's thinks they might, that will cut into people's discretionary income which they are already hesitant to spend which will further slow the recovery.

I think the market will be on the quiet side as it awaits the various data points relating to jobs / employment.  Because of this, I don't think there's much upside to floating and I would certainly lock ahead of the jobs data since good numbers here will have a negative impact on interest rates.  Contact me if I can help with anything - 702-812-1214 or 801-853-8720 (  Make it a great day.