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.