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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.

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