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 firstname.lastname@example.org. Make it a great day.