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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.

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