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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.

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