It's Hump day and the first of the jobs data was released this morning with ADP Private Payrolls coming in stronger than expected at 200K vs. 194K expected. This is another strong reading which follows last months 205K. Yesterday, the FNMA benchmark bond closed up 68 basis points but it was only up about 28 basis points or so before Janet Yellen's comments. The equity and bond markets both liked what she said and the general message was that she is going to be cautious about future interest rate increases. It's the quantitative easing and the ultra low interest rates that helped the stock market to recover over the last 7 years so naturally, the equity market loved hearing they will continue to get assistance. The bond market also loved her stance because as long as the Fed Funds rate remains low it means that the economy isn't strong enough for inflation to be any kind of a factor which means interest rates can remain low.
The benchmark bond closed only five basis points off its high yesterday and broke out of the week-long tight trading range in a big way. However, like I've talked about recently, floating into jobs data can be risky and we saw that this morning with another strong reading for ADP payrolls. The benchmark bond is currently down 19 basis points which is five basis points off the morning's low. This afternoon is the 7-year treasury auction and that could impact bond prices. Tomorrow we get Jobless Claims and Chicago PMI. The most likely to have any impact on mortgage bonds is the Purchasing Manager's Index. Friday brings us Non-farm Payrolls and the Unemployment Rate. So far this year, the Non-farm Payrolls number has moved in lock step with the ADP Private Payrolls data so I would expect a good number on Friday which means our upside for the benchmark bond has likely been reached, at least as far as the next couple of days is concerned. Locking in the gains from yesterday is a safe bet.
I'll be back with another post on Friday. If you (or your client) decides to float, make sure you have installed my app - buyerZapp, upper right hand corner of my blog - so that you can stay current with what's happening in the mortgage bond market and get my alerts when the bond market makes a big move in either direction. Contact me if I can help with anything: 801-853-8720 or 702-812-1214. Make it a great day.
Wednesday, March 30, 2016
Monday, March 28, 2016
Mortgage Bond Market Analysis - Jobs Week and Tax Refund Ideas
It's Monday of Jobs Week and it's also a little less than three weeks until tax returns (or extensions) are due. If you've read my blog for a while or met with me in person, you know that I have a financial background with a passion for investing and wealth creation. I conduct seminars on real estate investing, among other things, so I thought I might share with you some ideas regarding the best use of tax refunds.
If you don't currently own a home, a tax refund is a great way to buy a home. A refund of $5,000 is enough for a down payment on a $142,850 home with an FHA loan. A $7,500 refund is a down payment on a $214,285 home and a $10,000 refund can get you into a $285,700 home. Of course you have to have decent (not necessarily great) credit and your income has to support your debts (I can analyze all of this and let you know if you meet the criteria), but the hardest part for most homebuyers is saving for a down payment. There's ways to pay for closing costs, either with a seller credit or a lender credit; the down payment is always the hardest part. You may also qualify for a conventional loan which requires a 5% down payment (yeah, I know, there is a 3% down payment version but with the higher interest rate and mortgage insurance, it's not all that great).
If you buy your first home now, after two years you may want to move into a bigger / nicer home and you could use your savings from tax refunds to fund the down payment on those and keep the home you buy this year as a rental property for 2-3 (or more - there's some specific benefits you get by selling within three years of moving out of your primary residence) years at which time you could sell it and parlay that money into 1-2 more investment properties and / or invest in other assets for diversification purposes (Roth IRAs, for instance). Buying a move-up home is the best way to "buy" an investment property because you move into the nicer home you are purchasing but instead of selling your current home, you keep it for an investment property which then gives you rental income, tax advantages such as depreciation and other write-offs, and asset appreciation. Even if homes are only appreciating at 3-5% per year, the fact that you have a mortgage means that you are leveraged and your ROI will be much greater than the annual appreciation rate.
My detailed spreadsheet will help you see the financial benefits of not only owning a home but the greater benefits you will realize by moving up and then renting out your current home. Once you get started, there's a lot more to think about such as how long you should keep your rental properties before selling and buying more homes or refinancing, pulling money out and buying new homes in addition to the types of properties: single family, duplexes, town homes, condos, cabins, four-plexes, etc. Furthermore, there are other things to consider such as asset protection that an estate planning attorney can help you with and lots of great tax benefits that only a good CPA can help you maximize. Contact me for a copy of my spreadsheet to see how much wealth you can create with your tax refund so that you can get on track to a dream retirement - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Jobs Week: There's a fair amount of data this week, not just job-focused data. Last week, the FNMA benchmark bond finished down 29 basis points. This morning, the bond is up 18 basis points to 101.92 with oil selling off a tad and some of this morning's data points disappointing a bit. Consumer spending came in lower, as expected and higher than expected on its various data points. Pending Home Sales jumped 3.5% in February which beat expectations of 1.5%. Tomorrow we get Case-Schiller Home Price Index, Consumer Confidence and comments from Fed Chair Janet Yellen - it will be interesting to see if she changes her tune at all regarding rate hikes as the jobs data has been improving and there is an increasing number of FOMC members who think they should raise rates sooner rather than later. There are also some bond auctions today and tomorrow which could have an impact - that pesky supply-demand thing might come into play here. Wednesday could be the key point of the week. Forget the fact that it's Hump day, ADP Private Payrolls that come out on Wednesday have been a good indicator of Non-farm Payrolls over the last couple of months and that comes out on Friday along with the Unemployment Rate. Strong numbers here could mean an increased possibility of a Fed Funds Rate increase at the end of April when the FOMC next meets.
I don't like floating during this week because there are far too many things that could cause rates to move higher - especially considering recent jobs data trends. Rates are really great and locking now, even if rates do improve this week, isn't a bad thing. My guess is that bond prices will be lower by the end of the week which will make locking now a good thing. If I'm wrong and bond prices are higher and you locked today, you may be able to float your rate down, depending on your lender and how much improvement there was in the bond market. At any rate (yeah, that pun is always intended), make it a great day and know that I always stand ready to help in any way I can.
If you don't currently own a home, a tax refund is a great way to buy a home. A refund of $5,000 is enough for a down payment on a $142,850 home with an FHA loan. A $7,500 refund is a down payment on a $214,285 home and a $10,000 refund can get you into a $285,700 home. Of course you have to have decent (not necessarily great) credit and your income has to support your debts (I can analyze all of this and let you know if you meet the criteria), but the hardest part for most homebuyers is saving for a down payment. There's ways to pay for closing costs, either with a seller credit or a lender credit; the down payment is always the hardest part. You may also qualify for a conventional loan which requires a 5% down payment (yeah, I know, there is a 3% down payment version but with the higher interest rate and mortgage insurance, it's not all that great).
If you buy your first home now, after two years you may want to move into a bigger / nicer home and you could use your savings from tax refunds to fund the down payment on those and keep the home you buy this year as a rental property for 2-3 (or more - there's some specific benefits you get by selling within three years of moving out of your primary residence) years at which time you could sell it and parlay that money into 1-2 more investment properties and / or invest in other assets for diversification purposes (Roth IRAs, for instance). Buying a move-up home is the best way to "buy" an investment property because you move into the nicer home you are purchasing but instead of selling your current home, you keep it for an investment property which then gives you rental income, tax advantages such as depreciation and other write-offs, and asset appreciation. Even if homes are only appreciating at 3-5% per year, the fact that you have a mortgage means that you are leveraged and your ROI will be much greater than the annual appreciation rate.
My detailed spreadsheet will help you see the financial benefits of not only owning a home but the greater benefits you will realize by moving up and then renting out your current home. Once you get started, there's a lot more to think about such as how long you should keep your rental properties before selling and buying more homes or refinancing, pulling money out and buying new homes in addition to the types of properties: single family, duplexes, town homes, condos, cabins, four-plexes, etc. Furthermore, there are other things to consider such as asset protection that an estate planning attorney can help you with and lots of great tax benefits that only a good CPA can help you maximize. Contact me for a copy of my spreadsheet to see how much wealth you can create with your tax refund so that you can get on track to a dream retirement - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Jobs Week: There's a fair amount of data this week, not just job-focused data. Last week, the FNMA benchmark bond finished down 29 basis points. This morning, the bond is up 18 basis points to 101.92 with oil selling off a tad and some of this morning's data points disappointing a bit. Consumer spending came in lower, as expected and higher than expected on its various data points. Pending Home Sales jumped 3.5% in February which beat expectations of 1.5%. Tomorrow we get Case-Schiller Home Price Index, Consumer Confidence and comments from Fed Chair Janet Yellen - it will be interesting to see if she changes her tune at all regarding rate hikes as the jobs data has been improving and there is an increasing number of FOMC members who think they should raise rates sooner rather than later. There are also some bond auctions today and tomorrow which could have an impact - that pesky supply-demand thing might come into play here. Wednesday could be the key point of the week. Forget the fact that it's Hump day, ADP Private Payrolls that come out on Wednesday have been a good indicator of Non-farm Payrolls over the last couple of months and that comes out on Friday along with the Unemployment Rate. Strong numbers here could mean an increased possibility of a Fed Funds Rate increase at the end of April when the FOMC next meets.
I don't like floating during this week because there are far too many things that could cause rates to move higher - especially considering recent jobs data trends. Rates are really great and locking now, even if rates do improve this week, isn't a bad thing. My guess is that bond prices will be lower by the end of the week which will make locking now a good thing. If I'm wrong and bond prices are higher and you locked today, you may be able to float your rate down, depending on your lender and how much improvement there was in the bond market. At any rate (yeah, that pun is always intended), make it a great day and know that I always stand ready to help in any way I can.
Thursday, March 24, 2016
Mortgage Bond Market Analysis - Jobless Claims Thursday
It's Thursday which means Jobless Claims. Just like last week, they came in close to expectations with a reading of 265K which matched last week's number and was 3K below expectations. Durable Goods Orders came in slightly better than expected at -2.8% vs. expectations of -2.9; last month's reading was 4.2% so it's not too surprising to see a number like this in our fragile economy. Ex-transportation, Durable Goods was much worse than expected as it was -1.0% vs. expectations of -.2%.
Oil is once again the big driver as it is down a fair amount today due to a strong dollar and mounting US stockpiles. The FNMA benchmark bond is up 6 basis points at 101.96 and is testing the 2nd resistance level of 101.98 as well as the 50 day moving average. After closing up 27 basis points yesterday, I think there is a fair amount of headwind that will keep the bond from moving too high today. The RSI is getting close to the overbought threshold so that may start to play a bit of a factor with traders. The bond market closes early today - 2:00 pm EDT - and it is closed tomorrow. GDP is out tomorrow but you may want to lock before the long weekend just to be safe. I'm available over the weekend to help with pre-approvals and mortgage questions - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Make it a great day and a better weekend - whenever your weekend starts. Batman V. Superman is out (as my son has reminded me) and we have the Sweet 16 and Elite 8 this weekend for NCAA basketball. Enjoy.
Oil is once again the big driver as it is down a fair amount today due to a strong dollar and mounting US stockpiles. The FNMA benchmark bond is up 6 basis points at 101.96 and is testing the 2nd resistance level of 101.98 as well as the 50 day moving average. After closing up 27 basis points yesterday, I think there is a fair amount of headwind that will keep the bond from moving too high today. The RSI is getting close to the overbought threshold so that may start to play a bit of a factor with traders. The bond market closes early today - 2:00 pm EDT - and it is closed tomorrow. GDP is out tomorrow but you may want to lock before the long weekend just to be safe. I'm available over the weekend to help with pre-approvals and mortgage questions - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Make it a great day and a better weekend - whenever your weekend starts. Batman V. Superman is out (as my son has reminded me) and we have the Sweet 16 and Elite 8 this weekend for NCAA basketball. Enjoy.
Wednesday, March 23, 2016
Mortgage Bond Market Analysis - Hump Day
It's Hump day and one day after the terrorist attacks in Brussels. A geo-political event like that often spurs a flight to quality / safety which means investors move out of stocks and commodities and in to bonds. It was hard to see anything like that yesterday with the FNMA benchmark bond finishing down 13 basis points though perhaps it would have closed down more if it weren't for a flight to safety. The only data point we received yesterday was the Richmond Fed Manufacturing Index which obliterated expectations with a reading of 22 vs. estimates of -1. This morning the data was a little less surprising with New Home Sales coming in at 512K vs. estimates of 510K.
The more influential dynamic is what the talking heads from the Fed are saying. Janet Yellen expressed some dovishness in her remarks last week with regard to the economy and rate hikes. There was one voting member who dissented last week and wanted to raise rates .25%. Esther George, Kansas City Fed president is quite hawkish and thought that they should have raised the rates last week. In comments this week, three non-voting members of the FOMC have voiced opinions similar to Ms. George's. Patrick Harker, new president of the Philadelphia Fed, John Williams of San Fransisco and Dennis Lockhart of Atlanta are all leaning toward a rate hike in April. The FOMC has 17 members, 10 of which vote. Nearly one quarter of the FOMC believes that rates should be increased but only one of the 10 voting members last week thought rates should be increased. We have about five weeks until the next FOMC meeting and a lot could happen between now and then and while they will be looking closely at our economic data, there is much concern about global economic weakness and how it might impact our economy.
One thing to keep an eye on is that there is an increasing belief in England that they should exit the European Union. The Queen wants out as do many of the leaders. England will hold an official vote regarding this issue on June 23rd. Should they decide to annex themselves from the union, this will certainly weaken the EU and nobody knows how that will impact Europe's economy or the global economy. The benchmark bond has recovered all of yesterday's losses and then some as it is currently up 20 basis points. We are seeing a bit of a flight to quality today as oil is selling off and money is moving into bonds. Tomorrow we get Jobless Claims and Durable Goods Orders. The bond market will close early tomorrow and will be closed on Friday for Good Friday. I would float with caution - if you haven't installed my app (buyerZapp) on your phone you can click on the link in the top right corner - and I will send an alert if the bond moves against us by an amount that might cause a reprice. Be ready to act quickly if you get that alert. We could see some lingering buying in the bonds this afternoon and tomorrow, especially if tomorrow's data is weak. That said, locking now isn't a bad thing since I wouldn't anticipate too much of a gain from this point; I think it's unlikely we see much benefit if any from floating.
As always, contact me if I can help with anything - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
The more influential dynamic is what the talking heads from the Fed are saying. Janet Yellen expressed some dovishness in her remarks last week with regard to the economy and rate hikes. There was one voting member who dissented last week and wanted to raise rates .25%. Esther George, Kansas City Fed president is quite hawkish and thought that they should have raised the rates last week. In comments this week, three non-voting members of the FOMC have voiced opinions similar to Ms. George's. Patrick Harker, new president of the Philadelphia Fed, John Williams of San Fransisco and Dennis Lockhart of Atlanta are all leaning toward a rate hike in April. The FOMC has 17 members, 10 of which vote. Nearly one quarter of the FOMC believes that rates should be increased but only one of the 10 voting members last week thought rates should be increased. We have about five weeks until the next FOMC meeting and a lot could happen between now and then and while they will be looking closely at our economic data, there is much concern about global economic weakness and how it might impact our economy.
One thing to keep an eye on is that there is an increasing belief in England that they should exit the European Union. The Queen wants out as do many of the leaders. England will hold an official vote regarding this issue on June 23rd. Should they decide to annex themselves from the union, this will certainly weaken the EU and nobody knows how that will impact Europe's economy or the global economy. The benchmark bond has recovered all of yesterday's losses and then some as it is currently up 20 basis points. We are seeing a bit of a flight to quality today as oil is selling off and money is moving into bonds. Tomorrow we get Jobless Claims and Durable Goods Orders. The bond market will close early tomorrow and will be closed on Friday for Good Friday. I would float with caution - if you haven't installed my app (buyerZapp) on your phone you can click on the link in the top right corner - and I will send an alert if the bond moves against us by an amount that might cause a reprice. Be ready to act quickly if you get that alert. We could see some lingering buying in the bonds this afternoon and tomorrow, especially if tomorrow's data is weak. That said, locking now isn't a bad thing since I wouldn't anticipate too much of a gain from this point; I think it's unlikely we see much benefit if any from floating.
As always, contact me if I can help with anything - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
Monday, March 21, 2016
Mortgage Bond Market Analysis - The Schedule for the Week
It's Monday with no economic data and the benchmark bonds are selling off. Currently the FNMA benchmark bond is down 19 basis points while the GNMA is down 39 basis points. Oil is basically flat so what's driving the market? I think that traders saw an opportunity to take some profits off the table after a nice little run and ahead of a number of Fed talking heads this week - just to be safe. Today we are getting comments from Locker, Lockhart and Bullard. Tomorrow we will hear from Evans and Harker and on Thursday we will hear from Bullard again. S.F. Fed President John Williams told a publication that he would be advocating for a rate hike at the April meeting so this probably also gave traders a reason to sell bonds.
In addition to the messages we will get from the talking heads (not the 70s alt rock band), there are a few other things that could impact bond prices and, by extension, interest rates this week. Durable Goods Orders could have an impact; a strong reading would be negative for bonds (but good for the economy). Oil prices will continue to impact bond prices - as oil goes up, bonds usually sell off and vice versa. Finally, any geo-political event that signals instability can impact bonds although these are not scheduled and so the surprise factor and have a bit of a multiplier effect as well.
I like to keep some perspective on the movement of interest rates, especially when the trend is up. When we as individuals are buying a house and looking to lock a rate for our mortgage, we want the rate to be as low as possible. Keep in mind, however, that rates are low when the economy is weak. Historically, when the economy is strong, rates are in the 6%-7.5% range. As the economy gets stronger and inflation starts to raise it's head, the Fed increases rates to try to slow growth and inflation. Inflation devalues the dollar - as prices rise, our dollars buy less. The flip side is that for those who own assets, inflation in the form of asset appreciation is a great thing. When the economy is doing well, businesses have increasing profits (quarter over quarter) which leads to increasing stock prices and higher values on our investment accounts. When the economy is strong, there are more good jobs which means more people can afford to buy homes and then things they need to fill those homes which helps those companies who make the things that go in the homes and allows them to make more money and offer more jobs so that more people can buy homes. As more people buy homes the law of supply and demand dictates that home prices rise and when that happens, current homeowners might find that they have enough equity in their home to be able to afford a move-up home after selling their current home. All of this means a lot more transactions for Realtors, loan officers, title companies, insurance agents and such which means they can afford to do things like buy homes. With all of the people needing mortgages, the demand for money increases which also helps push rates higher. There's more to it than this but I've probably already exhausted your attention. Suffice it to say that the country as a whole and we as individuals are all better off with higher interest rates EXCEPT for the part where we are locking in that higher rate but if we have more job security and a higher income, it's probably not a bad offset. If you pay enough in interest to itemize your deductions, keep in mind that some of that higher interest rate is being subsidized.
At any rate (yes - pun intended), I would lock if you haven't already. To paraphrase Forrest Gump, rates are like a box of chocolates, when the talking heads speak, you never know what you're going to get. Contact me if I can help with anything (702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com) and feel free to share your thoughts in the comments section. Make it a great day and a better week.
In addition to the messages we will get from the talking heads (not the 70s alt rock band), there are a few other things that could impact bond prices and, by extension, interest rates this week. Durable Goods Orders could have an impact; a strong reading would be negative for bonds (but good for the economy). Oil prices will continue to impact bond prices - as oil goes up, bonds usually sell off and vice versa. Finally, any geo-political event that signals instability can impact bonds although these are not scheduled and so the surprise factor and have a bit of a multiplier effect as well.
I like to keep some perspective on the movement of interest rates, especially when the trend is up. When we as individuals are buying a house and looking to lock a rate for our mortgage, we want the rate to be as low as possible. Keep in mind, however, that rates are low when the economy is weak. Historically, when the economy is strong, rates are in the 6%-7.5% range. As the economy gets stronger and inflation starts to raise it's head, the Fed increases rates to try to slow growth and inflation. Inflation devalues the dollar - as prices rise, our dollars buy less. The flip side is that for those who own assets, inflation in the form of asset appreciation is a great thing. When the economy is doing well, businesses have increasing profits (quarter over quarter) which leads to increasing stock prices and higher values on our investment accounts. When the economy is strong, there are more good jobs which means more people can afford to buy homes and then things they need to fill those homes which helps those companies who make the things that go in the homes and allows them to make more money and offer more jobs so that more people can buy homes. As more people buy homes the law of supply and demand dictates that home prices rise and when that happens, current homeowners might find that they have enough equity in their home to be able to afford a move-up home after selling their current home. All of this means a lot more transactions for Realtors, loan officers, title companies, insurance agents and such which means they can afford to do things like buy homes. With all of the people needing mortgages, the demand for money increases which also helps push rates higher. There's more to it than this but I've probably already exhausted your attention. Suffice it to say that the country as a whole and we as individuals are all better off with higher interest rates EXCEPT for the part where we are locking in that higher rate but if we have more job security and a higher income, it's probably not a bad offset. If you pay enough in interest to itemize your deductions, keep in mind that some of that higher interest rate is being subsidized.
At any rate (yes - pun intended), I would lock if you haven't already. To paraphrase Forrest Gump, rates are like a box of chocolates, when the talking heads speak, you never know what you're going to get. Contact me if I can help with anything (702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com) and feel free to share your thoughts in the comments section. Make it a great day and a better week.
Friday, March 18, 2016
Mortgage Bond Market Analysis - Friday, Day Two of the NCAA
Yesterday was a VERY heavy day for data. What do you expect? It was the first day of the NCAA tournament with 16 games and when you consider all of the stats for the 32 teams that played (including my beloved Runnin' Utes) there's a lot of points, rebounds, assists, steals, turnovers, fouls, etc. We get more of the same today with the other 16 games of the 1st round.
As for the economic data, there was some of that as well. Initial Jobless Claims were lower than expected at 265K vs. 268K expected. Continuing Claims came in just a bit higher than expected at 2.235M vs. 2.228M expected. The Philly Fed Manufacturing Index blew away expectations with a reading of 12.4 vs. estimates of -1.7. Leading Economic Indicators were weaker than expected at .1 vs. estimates of .2. In spite of the Philly Manufacturing index being much stronger, the FNMA benchmark bond still followed Wednesday's big up day with some small gains, finishing up 17 basis points. The only thing we had this morning is the University of Michigan Consumer Sentiment Index which came in at 90.0 vs. estimates of 92.2. Oil is up again an that is providing some headwind for the bond to move any higher. It is currently up 5 basis points, 7 basis points off the morning high.
Since Wednesday's open, the bond is up 71 basis points. There's a possibility it could move higher on Monday considering the fact that oil has had a nice little run and some traders may want to take some profits off the table which would help bonds. That said, I've got a client who's loan I'm going to lock today in order to take advantage of this nice little run that mortgage bonds have had. If you or a client has a loan closing within 15 days, I would definitely lock - don't get greedy. If the loan is closing beyond that time frame, you may want to see what Monday brings but if you float, make sure you keep an eye on your phone (if you have my app that lets you get alerts when interest rates might move against you). Contact me if I can help in anyway: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend and Go Utes!!
As for the economic data, there was some of that as well. Initial Jobless Claims were lower than expected at 265K vs. 268K expected. Continuing Claims came in just a bit higher than expected at 2.235M vs. 2.228M expected. The Philly Fed Manufacturing Index blew away expectations with a reading of 12.4 vs. estimates of -1.7. Leading Economic Indicators were weaker than expected at .1 vs. estimates of .2. In spite of the Philly Manufacturing index being much stronger, the FNMA benchmark bond still followed Wednesday's big up day with some small gains, finishing up 17 basis points. The only thing we had this morning is the University of Michigan Consumer Sentiment Index which came in at 90.0 vs. estimates of 92.2. Oil is up again an that is providing some headwind for the bond to move any higher. It is currently up 5 basis points, 7 basis points off the morning high.
Since Wednesday's open, the bond is up 71 basis points. There's a possibility it could move higher on Monday considering the fact that oil has had a nice little run and some traders may want to take some profits off the table which would help bonds. That said, I've got a client who's loan I'm going to lock today in order to take advantage of this nice little run that mortgage bonds have had. If you or a client has a loan closing within 15 days, I would definitely lock - don't get greedy. If the loan is closing beyond that time frame, you may want to see what Monday brings but if you float, make sure you keep an eye on your phone (if you have my app that lets you get alerts when interest rates might move against you). Contact me if I can help in anyway: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend and Go Utes!!
Wednesday, March 16, 2016
Mortgage Bond Market Analysis - Fed Decision Day
The day of reckoning has come. It's Hump day and at 2:00 p.m. EDT the Fed will announce what they have decided with regard to the Fed Funds rate. It's expected that they will leave the rate the same so if they do that, the market shouldn't have much of a reaction. What isn't known is what Janet Yellen will say in her interview after the interest rate announcement. What she says will be key to what the market does.
Economic data that could impact the Fed: Yesterday and today gave us some key data points that may change the Feds tone and create a bit of worry for bond traders. Yesterday, January Business Inventories were up .1% vs. expectations of .0%. March Homebuilders' Sentiment came in at 58 vs. estimates of 59. Additionally, the NY Empire Manufacturing index blew away expectations of -.1 with a reading of +.62. Perhaps most importantly, the YOY Core CPI came in at 1.2 vs. expectations of 1.1. February Retail Sales were as expected at -.1%. Most of this data is better than expected and was negative for pricing as the FNMA benchmark bond closed down 23 basis points.
This morning, Building Permits came in lower than expected at 1.167M vs. 1.2M expected. On the other hand, Housing Starts beat expectations of 1.15M with a reading of 1.178M. Most importantly, the YOY Core CPI came in at 2.3% vs. expectations of 2.2%. This might get the Fed thinking about raising rates sooner rather than later and traders will be listening for comments from Yellen that might give a clue as to when they might start hitting the gas pedal. For the Fed, it's a bit like walking on egg shells because the economy is still very fragile and Europe and China are also facing major challenges as well. Additionally, the last time the Fed raised rates (December), the stock market had a huge sell-off which wasn't good for the economy.
In my post on Monday, I recommended to lock ahead of the Fed announcement; locking Monday would have been best because of the down day yesterday and the fact that the benchmark bond is currently down 9 basis points, although it is 16 basis points off its morning low. The RSI is just below the oversold threshold but I think this has little importance to what traders decide to do relative to all of the other things they are considering. Some experts are recommending to float heading into the Fed announcement as long as you have access to the bond market (which you do with my app - buyerZapp - upper right hand corner of my blog) but I think that if Yellen says the wrong things, the market could move VERY quickly and you wouldn't be able to act quickly enough to avoid locking at a worse rate. I would play it safe and lock - the market is bearish and the risk of a further sell-off in bonds is greater than the likelihood of traders deciding to buy bonds. If you lock now and rates improve, you've still locked at a great rate and if they improve enough, you may be able to float down, depending on your lenders lock policy. We have the ability to float down and I would love to help you or a client / friend with a mortgage. Contact me if I can assist in any way: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
Economic data that could impact the Fed: Yesterday and today gave us some key data points that may change the Feds tone and create a bit of worry for bond traders. Yesterday, January Business Inventories were up .1% vs. expectations of .0%. March Homebuilders' Sentiment came in at 58 vs. estimates of 59. Additionally, the NY Empire Manufacturing index blew away expectations of -.1 with a reading of +.62. Perhaps most importantly, the YOY Core CPI came in at 1.2 vs. expectations of 1.1. February Retail Sales were as expected at -.1%. Most of this data is better than expected and was negative for pricing as the FNMA benchmark bond closed down 23 basis points.
This morning, Building Permits came in lower than expected at 1.167M vs. 1.2M expected. On the other hand, Housing Starts beat expectations of 1.15M with a reading of 1.178M. Most importantly, the YOY Core CPI came in at 2.3% vs. expectations of 2.2%. This might get the Fed thinking about raising rates sooner rather than later and traders will be listening for comments from Yellen that might give a clue as to when they might start hitting the gas pedal. For the Fed, it's a bit like walking on egg shells because the economy is still very fragile and Europe and China are also facing major challenges as well. Additionally, the last time the Fed raised rates (December), the stock market had a huge sell-off which wasn't good for the economy.
In my post on Monday, I recommended to lock ahead of the Fed announcement; locking Monday would have been best because of the down day yesterday and the fact that the benchmark bond is currently down 9 basis points, although it is 16 basis points off its morning low. The RSI is just below the oversold threshold but I think this has little importance to what traders decide to do relative to all of the other things they are considering. Some experts are recommending to float heading into the Fed announcement as long as you have access to the bond market (which you do with my app - buyerZapp - upper right hand corner of my blog) but I think that if Yellen says the wrong things, the market could move VERY quickly and you wouldn't be able to act quickly enough to avoid locking at a worse rate. I would play it safe and lock - the market is bearish and the risk of a further sell-off in bonds is greater than the likelihood of traders deciding to buy bonds. If you lock now and rates improve, you've still locked at a great rate and if they improve enough, you may be able to float down, depending on your lenders lock policy. We have the ability to float down and I would love to help you or a client / friend with a mortgage. Contact me if I can assist in any way: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
Monday, March 14, 2016
Mortgage Bond Market Analysis - Fed Decision Week
It's Monday and while there is no data today, this week has the potential to be interesting with lots of things to influence rates. The FNMA benchmark bond is currently up 20 basis points ahead of a number of relatively important data points tomorrow which include Retail Sales, Producer Price Index, NY Empire Manufacturing Index, NAHB Housing Market Index and Business Inventories. I don't think the PPI will show any real inflation and the other data points aren't likely to show strong economic progress though it probably will show some slight improvement.
Wednesday is another big day with Housing Starts and Building Permits in addition to Consumer Price Index along with Capacity Utilization and Industrial Production. The biggie comes on Wednesday afternoon with the Fed Interest Rate Decision - expect them to stand pat - followed by the FOMC press conference. I don't expect anything earth-shattering here either. I think the market / traders might breath a small sigh of relief - if there's even any angst in the first place - but remember that oil is the primary driver right now when it comes to the flow of money. China's economy is also having some influence as is Europe on occasion but until our economy shows any real signs of life which would lead to some possible action (raising interest rates and selling mortgage bonds) by the FOMC, I don't see any huge movements happening. Assuming the price of oil recovers a bit - some experts expect it to get back to $50 or so in the coming months - interest rates will trend up as money flows from the bond market to the stock market.
With mortgage bonds higher this morning, I would lock ahead of tomorrow's and Wednesday's data (and Fed decision) just in case any of the data surprises to the upside enough to give traders the impetus to sell. Of course, oil is down pretty good today which is why rates are a bit better and in addition to the economic data and Fed concerns, oil could be up tomorrow and / or Wednesday. Don't forget to download my app (you can get it by clicking on the link in the upper right corner of my blog) so that you can always keep current on interest rates and real estate / financial news in addition to getting my alerts if the bond market makes a significant move. Contact me if I can help with a client or a mortgage question - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
Wednesday is another big day with Housing Starts and Building Permits in addition to Consumer Price Index along with Capacity Utilization and Industrial Production. The biggie comes on Wednesday afternoon with the Fed Interest Rate Decision - expect them to stand pat - followed by the FOMC press conference. I don't expect anything earth-shattering here either. I think the market / traders might breath a small sigh of relief - if there's even any angst in the first place - but remember that oil is the primary driver right now when it comes to the flow of money. China's economy is also having some influence as is Europe on occasion but until our economy shows any real signs of life which would lead to some possible action (raising interest rates and selling mortgage bonds) by the FOMC, I don't see any huge movements happening. Assuming the price of oil recovers a bit - some experts expect it to get back to $50 or so in the coming months - interest rates will trend up as money flows from the bond market to the stock market.
With mortgage bonds higher this morning, I would lock ahead of tomorrow's and Wednesday's data (and Fed decision) just in case any of the data surprises to the upside enough to give traders the impetus to sell. Of course, oil is down pretty good today which is why rates are a bit better and in addition to the economic data and Fed concerns, oil could be up tomorrow and / or Wednesday. Don't forget to download my app (you can get it by clicking on the link in the upper right corner of my blog) so that you can always keep current on interest rates and real estate / financial news in addition to getting my alerts if the bond market makes a significant move. Contact me if I can help with a client or a mortgage question - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
Thursday, March 10, 2016
Mortgage Bond Market Analysis - Jobless Claims Thursday
It's Jobless Claims Thursday but there's lots of other stuff influencing the market. Oil's up a bit so that's putting pressure on bonds - and they are selling off. However, usually when oil's up, the stock market is up but it's down as well; it's not typical for both stocks and bonds to be down on the same day but it can and does happen. Usually money flows from one to the other pushing prices higher where the money is flowing in.
Initial Jobless Claims came in better than expected at 259K vs. expectations of 275K. Continuing claims also came in better at 2,225K vs. 2,255K. With the good jobs data that was released last week, I kind of thought that jobless claims would come in better than the meager expectations. This is weighing a bit on the bond market along with oil. Contrarily, The ECB lowered their key interest rate and the deposit rate which is providing some support for bonds and keeping them from selling off too much. The FNMA benchmark bond sold off 34 basis points yesterday and broke through what was the first support level of 101.90 (it closed at 101.82). It is currently down 9 basis points, 7 basis points off the morning low but it is still below the new 1st support level of 101.77 at 101.73. The bond has sold off 90 basis points from the open on February 26th which is about a $900 cost to borrowers or about a .25% increase to the rate. The current price is testing the 50 day moving average but the RSI may provide some support if traders believe the bond is oversold and, thus, a good investment opportunity. I wouldn't buy that argument since oil is driving that bus.
I reiterate what I've been saying recently, floating is risky and I would lock to be protected from an increasing amount of good economic data that will drive bonds down further pushing rates higher. It won't take much more selling for the benchmark bond to switch back to the FNMA 3.5 from the current 3.0. As the economy improves, oil is likely to continue it's upward price climb which will adversely impact bonds. The 10-year treasury broke through a key level of 1.93% and is now at 1.94% so that's yet one more thing to consider. As always, feel free to contact me if I can help with anything mortgage related: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and Go Utes!! That's my alma mater and favorite college team for those who don't know.
Initial Jobless Claims came in better than expected at 259K vs. expectations of 275K. Continuing claims also came in better at 2,225K vs. 2,255K. With the good jobs data that was released last week, I kind of thought that jobless claims would come in better than the meager expectations. This is weighing a bit on the bond market along with oil. Contrarily, The ECB lowered their key interest rate and the deposit rate which is providing some support for bonds and keeping them from selling off too much. The FNMA benchmark bond sold off 34 basis points yesterday and broke through what was the first support level of 101.90 (it closed at 101.82). It is currently down 9 basis points, 7 basis points off the morning low but it is still below the new 1st support level of 101.77 at 101.73. The bond has sold off 90 basis points from the open on February 26th which is about a $900 cost to borrowers or about a .25% increase to the rate. The current price is testing the 50 day moving average but the RSI may provide some support if traders believe the bond is oversold and, thus, a good investment opportunity. I wouldn't buy that argument since oil is driving that bus.
I reiterate what I've been saying recently, floating is risky and I would lock to be protected from an increasing amount of good economic data that will drive bonds down further pushing rates higher. It won't take much more selling for the benchmark bond to switch back to the FNMA 3.5 from the current 3.0. As the economy improves, oil is likely to continue it's upward price climb which will adversely impact bonds. The 10-year treasury broke through a key level of 1.93% and is now at 1.94% so that's yet one more thing to consider. As always, feel free to contact me if I can help with anything mortgage related: 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and Go Utes!! That's my alma mater and favorite college team for those who don't know.
Wednesday, March 9, 2016
Mortgage Bond Market Analysis - Hump Day and the Oil Yoyo
It's Wednesday and that means we are getting into full swing with the NCAA college basketball conference tournaments - Go Utes!! As for mortgage interest rates and the mortgage bond market that determines the rates, there was one economic data point this morning: Wholesale Inventories came in much stronger than expected at .3% vs. -2% expected. This is quite negative for pricing and will certainly raise expectations for a higher GDP. Oddly enough, the FNMA benchmark bond has bounced off it's morning low of 101.83 and is currently down just 17 basis points at 101.99. It was up 23 basis points yesterday and if you read my post on Monday I recommended locking on any gains which you should have done yesterday. When the bond is in a (tight) trading range and when there is a lot of reason or potential for the bond to move higher, floating overnight isn't a good thing since things happen like this morning where the previous day's gains are all erased with no chance to lock at the previous day's pricing.
Yesterday the 1st resistance level of 102.21 was tested and it held while the 1st level of support was tested on Monday morning and this morning and so far it has held both days. The RSI is right at the oversold threshold so all else being normal, that could influence some buying but traders are putting much more emphasis on oil and the weakness in China. For instance, yesterday oil was down in a big way which is why the bonds did well. This morning, oil is up strongly (though not up as much as it was down yesterday) so the bonds are selling off.
Later today there is a 10 year treasury auction and tomorrow morning we get Initial and Continuing Jobless claims (just like every Thursday) and, probably more importantly, we get Mario Draghi's statement from the ECB. Of course oil will have a say with what bonds do tomorrow as well. It is possible that Draghi might say something that moves the bond out of its trading range but if his comments don't do it, I doubt jobless claims will. If oil continues to push higher, it will take rates with it but I'm not really confident that oil traders are sold on oil going much higher until they really see a legitimate slowdown in production with an increase in demand. We may be stuck in this range for a little while. That said, I still wouldn't float - there is more risk and likelihood that rates move higher and floating on the hopes of picking up a little better pricing probably isn't prudent. Download buyerZapp - top right hand corner of my blog page - so that you can keep current on interest rates and mortgage bonds plus you get a handy mortgage calculator as well. Contact me if I can help with anything mortgage related.
If you would like to get my free report "How to Avoid the Most Common and Costly Mistakes When Getting a Mortgage: Making the Best Choice for Your Financial Future," email me at jed.wunderli@noblehomeloans.com - put Free Report in the subject line. Make it a great day and a better week.
Yesterday the 1st resistance level of 102.21 was tested and it held while the 1st level of support was tested on Monday morning and this morning and so far it has held both days. The RSI is right at the oversold threshold so all else being normal, that could influence some buying but traders are putting much more emphasis on oil and the weakness in China. For instance, yesterday oil was down in a big way which is why the bonds did well. This morning, oil is up strongly (though not up as much as it was down yesterday) so the bonds are selling off.
Later today there is a 10 year treasury auction and tomorrow morning we get Initial and Continuing Jobless claims (just like every Thursday) and, probably more importantly, we get Mario Draghi's statement from the ECB. Of course oil will have a say with what bonds do tomorrow as well. It is possible that Draghi might say something that moves the bond out of its trading range but if his comments don't do it, I doubt jobless claims will. If oil continues to push higher, it will take rates with it but I'm not really confident that oil traders are sold on oil going much higher until they really see a legitimate slowdown in production with an increase in demand. We may be stuck in this range for a little while. That said, I still wouldn't float - there is more risk and likelihood that rates move higher and floating on the hopes of picking up a little better pricing probably isn't prudent. Download buyerZapp - top right hand corner of my blog page - so that you can keep current on interest rates and mortgage bonds plus you get a handy mortgage calculator as well. Contact me if I can help with anything mortgage related.
If you would like to get my free report "How to Avoid the Most Common and Costly Mistakes When Getting a Mortgage: Making the Best Choice for Your Financial Future," email me at jed.wunderli@noblehomeloans.com - put Free Report in the subject line. Make it a great day and a better week.
Monday, March 7, 2016
Mortgage Bond Market Analysis - A Quiet Monday
Oil is up solidly this morning and there is no real data to speak of so bonds will take their cue from oil. On Friday I talked about what might happen if the bond closed at or above the current 1st level of support which was 102.00. I said that with not much economic data being released that oil and China would be the drivers and that a bond sell-off would just automatically occur; it would take a move higher in oil. This morning oil is higher and is approaching $40 per barrel and OPEC has set a target of $50. The RSI is now in oversold territory but that won't matter much if oil continues to move higher. The trend since last Tuesday has been lower, for the most part. I continue to recommend locking but if you are going to float, keep a watchful eye on the market and lock on any gains. The benchmark bond is currently down 13 basis points at 101.91, 1 basis point above the new 1st support level.
Wholesale Inventories will be announced on Wednesday morning and we get weekly Jobless Claims on Thursday along with the ECB policy statement - this could have some impact on the market. I don't expect any legitimate buying in bonds but a huge sell-off isn't likely either with the weakness in China (and Europe - Thursday's statement from President Draghi could be interesting). Download my app (top right corner of the blog) in order to stay current on the mortgage bond market and receive rate alerts as well as all of the up-to-the minute economic news that could impact the mortgage bond market. Contact me if I can help with anything mortgage related - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and a better week.
Friday, March 4, 2016
Mortgage Bond Market Analysis - It's Friday and it's the last of the Jobs data
Happy Friday! Lots of data to discuss so let's get started. Today we got the last of the jobs data with the Non-farm Payrolls coming in much higher than expected at 242K vs. estimates of 190K - in my post on Wednesday, I warned that there was a good likelihood of something like this happening based on the stronger-than-expected ADP Private Payroll numbers. December and January's NFP numbers were revised upward 30K as well. All of this is negative for bond pricing. The Unemployment rate remained unchanged at 4.9% as estimated but the average hourly earnings was down at -.1% vs. estimates of +.2%. The Labor Force Participation Rate increased from 62.7% to 62.9% - still not blistering but it is an improvement. Overall, the strong jobs numbers is negative for bond pricing and the FNMA Benchmark Bond is selling of a bit, currently down 22 basis points at 101.99. This is 1 basis point below the 1st support level.
On Wednesday I recommended locking before today and yesterday I sent out an alert to lock on my app - buyerZapp (you can download it in the upper right corner of my blog). Oil and stocks are both up a bit as you would expect with news like this morning's. Money is flowing the way it should but if you didn't lock Wednesday or at least by yesterday, you are looking at a more precarious market. The RSI is in between oversold and overbought so that's a non-factor right now (though it is closer to oversold) but with strong jobs data, there is significant headwinds against the bond moving higher. Conversely, the 1st support level of 102 is being tested right now with the 2nd support level 21 basis points below that should the bond sell off that much. The 50 day moving average is at 101.5 which would be the next support level. What this means is that a drop in bond price to the 2nd support level would cost a borrower about $400 in points on a $200,000 loan. A subsequent drop to the 50 day moving average of 101.5 would cost about another $600 on a $200,000. The 22 basis point drop today is about a $400 cost. This adds up quickly. Since the open on Tuesday morning, the benchmark bond has sold off 56 basis points which is about .125% in rate or just over $1,000 in fee on a $200,000 loan.
The trend for the day looks to be down so if the 1st support level doesn't hold, I anticipate we'll see the bond close down 30+ basis points. If we are luck, the support level holds and we close right around our current level. Data is light next week which means the focus will be back to the weakness in China and the price of oil - as oil goes down, it's good for mortgage rates. If you are really conservative, I would recommend locking in case the bond sells off through the support level. If you are more of a gambler, float and see what next week brings. Either way, download my app so that on days when I don't write a post or on days when the market is extremely volatile, you can receive warning alerts to lock so that it doesn't cost you $400 or more. I'm always happy to help in any way I can so feel free to contact me at 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend.
On Wednesday I recommended locking before today and yesterday I sent out an alert to lock on my app - buyerZapp (you can download it in the upper right corner of my blog). Oil and stocks are both up a bit as you would expect with news like this morning's. Money is flowing the way it should but if you didn't lock Wednesday or at least by yesterday, you are looking at a more precarious market. The RSI is in between oversold and overbought so that's a non-factor right now (though it is closer to oversold) but with strong jobs data, there is significant headwinds against the bond moving higher. Conversely, the 1st support level of 102 is being tested right now with the 2nd support level 21 basis points below that should the bond sell off that much. The 50 day moving average is at 101.5 which would be the next support level. What this means is that a drop in bond price to the 2nd support level would cost a borrower about $400 in points on a $200,000 loan. A subsequent drop to the 50 day moving average of 101.5 would cost about another $600 on a $200,000. The 22 basis point drop today is about a $400 cost. This adds up quickly. Since the open on Tuesday morning, the benchmark bond has sold off 56 basis points which is about .125% in rate or just over $1,000 in fee on a $200,000 loan.
The trend for the day looks to be down so if the 1st support level doesn't hold, I anticipate we'll see the bond close down 30+ basis points. If we are luck, the support level holds and we close right around our current level. Data is light next week which means the focus will be back to the weakness in China and the price of oil - as oil goes down, it's good for mortgage rates. If you are really conservative, I would recommend locking in case the bond sells off through the support level. If you are more of a gambler, float and see what next week brings. Either way, download my app so that on days when I don't write a post or on days when the market is extremely volatile, you can receive warning alerts to lock so that it doesn't cost you $400 or more. I'm always happy to help in any way I can so feel free to contact me at 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend.
Wednesday, March 2, 2016
Mortgage Bond Market Analysis - Hump day and the first day of jobs data
It's Hump day and it's also ADP Private Payroll day. Let's get started with what happened yesterday. February ISM Manufacturing came in at 49.5, still showing contraction but 1 point higher than the expected 48.5. January Construction Spending came in much hotter than anticipated at 1.5 vs. .4. Couple these hot data points with a surge in oil which helped cause a big day in the stock market and you get a down day for mortgage bonds. The FNMA benchmark bond closed down 34 basis points which was below the then current 1st support level. The new support level is at 102.00 and the bond is down 7 basis points at 102.14. I sent out an "Alert to Lock" yesterday on my app (buyerZapp); if you don't have my app, the link is in the upper right had corner of my blog - the app provides great real estate and mortgage related news and data as well as system alerts and personal alerts when rates move against us.
With the sell-off in bonds, the RSI is getting closer to oversold which will provide some resistance as it moves closer to the threshold. China's weakness and oil - on the days it sells off - will continue to be an impetus to traders to buy bonds and help keep rates low. This morning, oil is off a little which is providing a modicum of help for the FNMA benchmark bond but ADP Private Payrolls came in much stronger than expected at 214K vs. estimates of 190K. Lately, the correlation between the ADP report and the Non-farm payrolls on Friday has been stronger so if you haven't locked, you may want to lock before Friday because a good NFP report will likely cause more selling in the bond market. I'll send out alerts on my app during the day if the market moves significantly in one direction or the other. You can also contact me at 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
With the sell-off in bonds, the RSI is getting closer to oversold which will provide some resistance as it moves closer to the threshold. China's weakness and oil - on the days it sells off - will continue to be an impetus to traders to buy bonds and help keep rates low. This morning, oil is off a little which is providing a modicum of help for the FNMA benchmark bond but ADP Private Payrolls came in much stronger than expected at 214K vs. estimates of 190K. Lately, the correlation between the ADP report and the Non-farm payrolls on Friday has been stronger so if you haven't locked, you may want to lock before Friday because a good NFP report will likely cause more selling in the bond market. I'll send out alerts on my app during the day if the market moves significantly in one direction or the other. You can also contact me at 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com. Make it a great day.
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