Search This Blog

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.

No comments: