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Friday, April 29, 2016

Mortgage Bond Market Analysis - Lot's of data and guessing

It's the last Friday of April and Jobs Week is next week.  Europe began our day with some strong data which was bad for bonds.  Thankfully, our data was mostly good for bonds and the FNMA benchmark bond is currently up 5 basis points (20 basis points off the morning low) because of it.  March Personal Income rose .4% vs. expectations of .3%.  This is good because the more people make the more people can spend and consumer spending is what drives our economy.  Not so fast - Personal Spending was only up .1% vs. expectations of .2% and the Core PCE (Personal Consumption Expenditures) YOY dropped from 1.7% to 1.6% - hence, people are saving more and spending less which is not good for the economy but it is good for personal finances.

The Employment Cost Index came in at .6% as expected.  The Chicago PMI came in at 50.4, much lower than the estimates of 53 but still above the critical 50 level which means it's still expanding.  You may recall it wasn't too long ago where this data point was in the low to mid 40s consistently.  Lastly, the final April Michigan Consumer Sentiment Index came in at 89 vs. estimates of 90.  You may also recall that just a few months ago this was around 95 or 96 and spending was low - I commented that the consumer sentiment index was quite high considering the fact that consumers weren't backing up their sentiment with the action of spending.  I wrote that perhaps they were confident because the employment outlook was improving but not confident enough to start spending - at any rate, if they aren't confident enough to be spending, the reading, in my eyes, was too high.  Today's reading is much more in line with consumer's spending actions and it will be interesting to see if spending picks up.  With the Core PCE where it is, this gives the Fed more reason to wait before the next rate increase which means there is more opportunity for people to go out and buy a home and get a great low rate on a mortgage.  Additionally, when people buy homes, they usually also buy new furniture, appliances, and stuff to fix up their home which means more income and jobs for the people who sell those things which means that they might be able to buy more stuff, including homes.  But I digress.  I would recommend floating for now but if you do float, make sure you keep your eye on my app - buyerZapp - so that you can act quickly if the market moves against you and I issue a warning to lock.

Waiting to buy a home means that the buyer will pay more money for the same home in price and in interest rate - as the economy recovers, rates trend up.  A $200,000 home today will cost $208,000 a year from today with 4% appreciation.  The loan amount for an FHA loan is now $7,720 higher than if the purchase price were $200,000.  The payment, assuming rates stay the same is $66.10 higher at the $200,720 loan amount than at the $193,000 loan amount based on the $200K purchase price.  If rates also go up 1% - which is very possible - the payment would then be $150.36 higher.  This means that some buyers may have to settle for a lesser home if the higher payment makes their debt ratio too high to qualify.  I'm happy to answer any questions you or a client may have and to provide scenarios and options.  Here is a link to my FREE mortgage report:  How to Avoid the Most Common and Costly Mistakes When Getting a Mortgage which contains lots of information regarding the process, fees, interest rates and locking, loan programs, financial strategies and more.  Check it out and feel free to share it as well.  Make it a great day and a better weekend.

Wednesday, April 27, 2016

Mortgage Bond Market Analysis - Alert to LOCK: Read all the way to the END.

The Fed Interest Rate Decision was just announced and there is no rate increase.  However, the tone is more hawkish than previous comments as they see the global economic risks as less threatening.  Since the market had not priced this in, this is negative for pricing and bonds have sold off since the decision was made public.  The fact that oil is up again is not helping.  Lock ahead of a potential reprice just to be safe.

On the data side, Pending Home Sales came in at 1.4 vs. estimates of .5 - this isn't a factor in pricing because the focus is on the Fed (and oil to a lesser extent today).  Tomorrow we get Jobless Claims and Gross Domestic Purchase Price Index.  Oil will continue to influence bond pricing and traders will now start trying to figure out if the Fed will raise rates at the June meeting or if it will be after that.  That's all for now.  Make it a great HUMP day.

EDIT:  after absorbing the information, traders have done an about-face of their knee-jerk reaction and have started buying again - the FNMA benchmark bond is now up 7 basis points where it was flat just a few minutes ago.  This is not a big swing but it was a quick sell-off when the announcement was made.  It's probably o.k. to continue floating.  If you do float - keep an eye on my app - buyerZapp - in case the market moves against you.

Tuesday, April 26, 2016

Mortgage Bond Market Analysis - A decoupling between oil and bonds?

Over the last two weeks we have seen the relationship between oil and stocks weaken.  Today we are seeing a decoupling between oil and bonds.  Oil is recovering after a down day yesterday and yet the FNMA benchmark bond is also up 11 basis points after closing down 10 basis points yesterday (a 64 basis point loss over the 5 day slide that began last Tuesday - this is equivalent to an increase in rate of about .125% plus a bit in fees).  Today's decoupling makes sense since March Durable Goods Orders came in much weaker than expected at .8% vs. estimates of 1.8%.  Ex-transportation it was -.2% vs. estimates of .5%.  These are BIG misses and are fueling the rally (if you can call up 11 basis points a rally).  The Case-Schiller Home Price Indicies came in at 5.4 - exactly as expected - which shows solid appreciation but it was below the 5.7 of last month; this is really no big deal since real estate, like all investments and economic data, has an ebb and flow.  The Richmond Fed Manufacturing Index came in at 14 beating the estimates of 12 but well below last month's reading of 22.  Consumer confidence came in at 94.2 - a good reading but below expectations of 96 and the previous reading of 96.2.

This afternoon there is a 5-year Treasury auction.  Considering that our yields, while low, are better than offerings of about every other country around the world (at least for those considered safe-haven investments for their bonds), I would expect the auction to be well received.  Tomorrow we get Pending Home Sales and that at 2:00 PM EDT we get the Fed Interest Rate Decision.  I think we will see them leave the Fed Funds rate right where it is and that is also the market's expectations as well.  With oil near recent highs and the economic data not exactly on fire, I would float into the decision.  If oil sells off in any significant way over the next several days, I think that rates will benefit in spite of what's happening this morning.  The RSI (Relative Strength Index) is also below the the oversold threshold so we could see some benefit from some technical buying if traders get confident enough to buy mortgage bonds in any significant way based on what the Fed says tomorrow and what oil does.

The benchmark bond has sold off three basis points since I began writing this post and is now up just 8 basis points.  A look at the chart leads me to believe that we will likely be in a sideways pattern today unless the auction this afternoon gives traders and impetus to trade with conviction.  My recommendation is to float with caution but, like always, pay attention to my app (buyerZapp - link is at top right corner of my blog) for alerts and news so that you can try to lock before a reprice for the worse should the market move against you.  As always, make it a great day.

Friday, April 22, 2016

Mortgage Bond Market Analysis - Breaking Out of the Trading Range

The good news is that it's Friday.  The bad news is that oil went the wrong way and took rates with it.  After Kuwait settled its oil strike, the experts assumed that oil would tank - and oil prices will likely decline in the near future with many experts forecasting new lows with Saudi Arabia and Russia ramping up their oil production - but when it was reported that US supplies had decreased, oil prices climbed higher and brought interest rates with it.

For the 4th day in a row, mortgage bond prices are down and oil is up.  The FNMA benchmark bond is down 52 basis points since its open on Tuesday - this is about .125% in rate.  The RSI is showing that the bond is significantly oversold but until oil decides to do an about face, I don't think this will matter.  Yesterday, Jobless Claims came in better (lower) than expected while the Philadelphia Fed Manufacturing Index came in much lower than expected at -1.6 vs. estimates of 8.9.  Traders are focused on oil and the good jobs numbers didn't distract from this focus.  On Wednesday I said to float with caution and to keep a close eye on my app (buyerZapp) in case the market moved against us.  It did when oil decided to climb higher and I sent an alert to lock.  A few minutes later I received a number of price change emails for the worse from the various banks I deal with.

I do expect that oil will sell off as inventories grow but no one knows exactly when that will be.  Until then, I recommend locking.  At a current price of 102.08, the benchmark bond is 10 basis points below the 2nd level of support.  The 100 day moving average is just slightly above 101.50 and that would be our next level of support for the time being, thought I don't expect a drop to that level.  Based on the way the chart looks so far this morning, I think that bonds will end up in the neighborhood they are in.  There is a bit of data coming out next week in addition to the Fed interest rate decision on Wednesday.  If you are not in a position to lock or if you just want to roll the dice, make sure you keep a close eye on my app - I will send lock alerts when the market moves (as long as I'm available - I'll be traveling on Monday so there will be no post but you can still get news relative to mortgage rates via the app).  You can download the link to the app by clicking on the icon in the upper right corner of my blog.  Make it a great day and a better weekend.

Wednesday, April 20, 2016

Mortgage Bond Market Analysis - Existing Home Sales and Oil

It's Wednesday - already.  While Building Permits and Housing Starts both came in a fair amount weaker than expected earlier this week, Existing Home Sales came in at 5.33mil vs. estimates of 5.30mil and previous of 5.08mil.  While this is not a direct factor in pricing, it is a sign that the economy (at least this sector) is picking up and if the economy in general begins to show signs of a true recovery, the Fed will have reason to raise rates.

Speaking of the Fed, they meet next week and the consensus is that they won't raise rates.  The market is expecting one rate increase from the Fed this year even though we've been hearing a lot of comments from several Fed members that there will be two.  It's really anybody's guess as to how many we'll have with so much in question.  China has had some decent economic news recently and if that continues, Janet Yellen would have reason to raise rates from a global perspective.  Europe remains very weak so they aren't providing any impetus for the Fed to make a move.  With Retail Sales not particularly strong stateside, our economy still has lots of tenuous areas that don't warrant a rate increase.  The fact that there was no agreement reached over the weekend to put a freeze or ceiling on oil production means that oil will likely come down in price over the short term as production is ramped back up now that the Kuwaiti oil strike has been resolved and decreasing oil prices will also help interest rates.

From a technical standpoint, the RSI is pushing the oversold threshold even though the FNMA benchmark bond has been trading in a very narrow range of about 40 basis points over the last 14 business days.  At 102.58 it is 14 basis points above the 1st level of support and 16 basis points below the 1st level of resistance.  Tomorrow, in addition to Jobless Claims, we get the Philadelphia Fed Manufacturing Survey which is expected to come in 2.5 points below the previous reading.  We also get the Leading Economic Indicators.  Low readings on these points would have a slightly positive impact on bond prices (meaning it would be good for rates) but the big thing is going to be oil.  While there is an increasing disconnect between oil and stocks, thanks in part to earnings season, the connection between oil and bonds is still pretty strong.  If oil heads down over the next couple of weeks, I would expect bonds to be the beneficiary.  I would float with caution and make sure that you have access to my app - buyerZapp - so that if the market moves against you, you will be able to get my lock alerts and hopefully lock before any price changes.

On a side note, the FNMA and GNMA bond had very different performances yesterday with the FNMA closing down 3 basis points and the GNMA closing down 27 basis points.  FNMA is the bond that is used for conventional loan rates and GNMA is used for FHA and VA rates.  Make it a great day.

Monday, April 18, 2016

Mortgage Bond Market Analysis - Oil and Data

Happy Monday morning.  Over the last seven days the FNMA benchmark bond has traded in a VERY tight range.  Traders are waiting for some event or news to give them reason to buy or sell.  Over the weekend, the energy czars of the major oil producing countries met and didn't come to an agreement to freeze production thanks to Saudi Arabia and Iran being at odds with each other.  While this may have given reason for traders to buy bonds since the price of oil dropped, it didn't drop as much as it could have because Kuwait is accidentally putting a freeze on oil since their oil workers are on strike.  This is probably only a short-term thing and oil could drop further in the near future if the strike gets worked out.

The only data point this morning is the NAHB Housing Market Index which came in at 58, lower than the expected 59 but still a solid number.  The benchmark bond is currently up 1 basis point at 102.59.  There are a few data points out this week and none of them should impact rates all that much.  The big things to watch are oil and the Kuwait strike as well as earnings season which gets into full gear this week.  Strong earnings, especially if expectations are for better earnings / revenue next quarter, could get investors moving money from bonds to stocks which would push rates higher.  Of course, the opposite is true as well, if earnings or prospects for improvement next quarter don't entice investors to put more money into stocks, bonds could see some gains.  I would lock since we are at the top end of our pricing relative to the last several months and rates are absolutely fantastic.  Take advantage of them and don't be greedy.

Friday, April 15, 2016

Mortgage Bond Market Analysis - Mostly Weak Data Has FNMA Bond Recovering

Happy Friday.  The New York Empire Manufacturing Index started the data releases off with a bang coming in at 9.56 vs. expectations of 2.21 and previous of .62.  This followed yesterdays strong Initial Jobless Claims reading of 253K vs. estimates of 268K which continued the trend of good jobs numbers.  The CPI came in a bit lower than expected at 2.2 vs. expectations of 2.3 but still above the Fed threshold of 2.0.  Then come the surprises.  Industrial Production was down with a reading of -.6 vs. estimates of -.1 and Capacity Utilization was 74.8 vs. expectations of 75.5.  The really big miss, though, was the Michigan Consumer Sentiment Index which came in below 90 for the first time in a long time with a reading of 89.7 vs. estimates of 92.  This is quite surprising considering the increasingly good jobs data we've been having over the first 3.5 months of the year but the fact that it hasn't translated to consumer spending, this number makes some sense.

Yesterday the FNMA benchmark bond closed down 17 basis points on the strong data but has made most of that loss back this morning.  It is currently up 15 basis points at 102.62, 11 basis points of the morning high.  The RSI is a non-factor as it is hovering around the mid-point between overbought and oversold.  It looks like the bond is trending up for the day but the most recent down tick might break that trend if the price goes below the most recent low (which was above the previous most recent low).  That said, I would lock before the end of the day since the oil czars are meeting on Sunday in Qatar and if they decide to curb production then oil prices will go up and that is bad news for interest rates.  Make it a great day and a better weekend.

Wednesday, April 13, 2016

Mortgage Bond Market Analysis - Retail Sales, PPI, Business Inventories and ...

It's Hump day and there is a lot going on in the economic data / bond market world.  Retail sales came in weaker than expected which could be an indicator that credit usage (or lack there of) is a better indicator of consumption than improving employment numbers and increasing wages - if this is true, the savings rate should be increasing - it has increased since January from 5.2% to 5.4% but last October it was 5.6% and in November and December it was 5.5%.  From a historical perspective, from 2006-2008, the savings rate in the U.S. was around 3% (always less than 4%) and it spiked to just above 10% in late 2012 and currently looks to be trending up - hopefully people are saving to buy homes since now is truly a fantastic time to buy.

Back to the data - Retail Sales came in at -.3 vs. expectations of .1; ex-Auto, the number came in at .2 vs. expectations of .4.  The Producer Price Index also came in below expectations at 1.0 vs. 1.1 - CPI is much more important to the Fed and we get that tomorrow.  Finally, Business Inventories matched their weak expectations of -.1.  With all of this weak / weaker than expected data, you would think that the FNMA benchmark bond would be moving higher, right?  Well you (and I) would be wrong.  Chinese exports were stronger than expected and that is getting the most weight right now since Yellen has said that the Fed will increase rates when they see the global economy strengthening and China is a huge part of that.  The other thing that will keep traders cautious is the Fed Beige Book which comes out this afternoon - this will likely give traders more direction.

10-Year Treasury Auction:  This might be the saving grace - with bonds in Europe offering very low yields, negative in some cases, by contrast, US treasuries look quite attractive in the upper 1% to upper 2% range.  If the appetite for the 10-year treasury that is being auctioned this afternoon is strong, this will be a good thing for mortgage bonds as well and we could see rates improve.

I locked yesterday:  I didn't actually lock but I do have a client who decided to lock and we got her locked at 3.375% on a 30 year fixed rate FHA.  She was ecstatic.  Rates might move lower today - the RSI is closer to oversold than overbought (that moved quickly on a couple of light down days) so that could help as well - probably not, though.  I think traders are trading more on economic data than they are on technicals.  Tomorrow we have a 30 year bond auction, the CPI and Jobless Claims.  Friday brings us the Consumer Sentiment Index, Industrial Production, NY Manufacturing Index and Capacity Utilization - none of these will likely have a huge impact.  China releases their GDP number and THAT could definitely have some influence - a good number will be bad for interest rates.

Currently the benchmark bond is down 3 basis points which is 12 basis points off its morning low.  I would float with caution only because we might get some good results based on the auction.  Have your phone close to you since I will send out an alert to Lock via my app (buyerZapp) if the auction doesn't go well and bonds sell off.  Make it a great Hump Day.

Monday, April 11, 2016

Mortgage Bond Market Analysis - It's all about China, Oil and Retail Sales this week

It's Monday and this week brings a lot more data and potential volatility than we had last week.  As I mentioned in my post on Friday, we will get more data including the PPI, CPI and Retail Sales.  Oil will probably also play an important roll as will China's GDP which comes out on Friday.  These should be the three biggest drivers of interest rate movement this week and you may want to lock ahead of their releases - of course, oil prices fluctuate every day so that's not a release item.  Here's what to look for and how it could impact the market.

Retail Sales:  We get the data on Wednesday and the market is expecting a nice improvement from February's reading of -.1% with an expectation of .4%.  Stronger jobs data as well as rising wages support the notion of better retail sales, however, the consumer credit numbers do not so it is a bit of a guessing game.  A strong retail sales number will be bad for mortgage rates while a weak number will be good for rates.

Oil:  With a big meeting coming up this Sunday in Qatar, expect oil prices to be very volatile as traders try to guess what's going to happen with regard to oil production based on comments throughout the week by various energy czars from oil producing nations.  As sentiment for a freeze in production increases, you can expect oil prices to rise and mortgage bond prices to fall (pushing rates higher).  Conversely, if traders believe that a freeze on output isn't likely, expected oil prices to drop and mortgage bond prices to rise.  We'll find out the results of the meeting on Monday - I would lock by Friday just in case.

China:  Considering the size of China's economy and considering Janet Yellen's comments the last couple of times she has spoken to the press where she has said that the Fed's moves will depend on the strength of the global economy, it's a good bet that if China reports a good GDP, it will not be good for our interest rates as traders will sell bonds based on the belief that the Fed will see an improving global economy as a signal to increase rates.

Import Prices are released tomorrow, the PPI is released on Wednesday along with Business Inventories, the Fed's Beige Book and, of course, Retail Sales.  The CPI is released on Thursday in addition to Weekly Jobless Claims.  Wednesday and Friday are the big hot points of the week.  This morning, the FNMA benchmark bond was down as much as 26 basis points but has rise considerably since then and is currently down only 3 basis points at 102.92 as oil has paired some of its gains.  Assuming oil continues to pair its gains, look for bonds to continue to improve.  Float with extreme caution and keep your eye on my app (buyerZapp) so that you can move quickly if I issue an alert to LOCK.  You can get my app by clicking on the link in the top right corner of the blog.  As always, feel free to contact me if I can help in any way and make it a great day and a better week.

Friday, April 8, 2016

Mortgage Bond Market Analysis - Data and Oil

Happy Friday, the day we all look forward to throughout the week unless you're a Realtor or loan officer - we get to work on Saturdays and Sundays for our clients.  It's been a light data week and this morning is no exception with the only release being February Wholesale Inventories which came in at -.5 vs. expectations of -.1 and previous of .3.  This is a low number and will cause estimates of the GDP to be lowered.  Yesterday Jobless Claims came in about as expected but oil started off down a fair amount which lead to traders buying bonds - I sent out an alert to float on my app (buyerZapp) so hopefully you have that app and got the alert.

Wednesday the FNMA benchmark bond closed down 20 basis points, 8 basis points off the low and the market didn't have much of a reaction to the FOMC minutes when they were released; hence, there were no surprises.  Yesterday, with the weakness in oil, stocks sold off and bonds were the benefactor.  The benchmark bond closed at 102.89, 13 basis points off its high, but still up 27 basis points on the day.  The 2nd level of resistance (103.05) was tested and held.  At the current price of 102.78, the bond is 5 basis points below the 1st level of resistance and 23 points above the 1st level of support.  The RSI (Relative Strength Index) is still above the overbought level so that could add to some selling.  Oil started to rebound yesterday afternoon and is continuing its surge this morning as it is up about 10% from yesterday's lows.  Here's a look at the mortgage bond chart:

As you can see, we have had a see-saw week with Monday, Wednesday and Friday all down and Tuesday and Thursday being up.  Currently we are up overall for the week but we'll have to see where it goes from here.  Next week we get some key data points with the PPI, CPI, and Retail Sales, among others.  There is no data of note on Monday so oil is likely to be the driver and we may very well see a bit of profit taking after the quick run on Monday which could help rates; on the other hand, oil traders may be emboldened to buy more which would push bond prices down further and rates higher.  The bond is currently down 16 basis points at 102.73.  It is 2 basis points off the low and is testing the 102.70 mark for the 2nd time this morning.  If this level holds, we will probably be in a lateral move throughout the rest of the day; if it breaks through this level, we will likely see more selling with a downward trend.  At this point, I would float with extreme caution - keep an eye on your phone (make sure you get my app - buyerZapp - via the link in the upper right hand corner of the blog page) for an alert from me if it breaks through this level.  I'm available to help with a pre-approval or anything else mortgage related so don't hesitate to contact me - 702-812-1214 or 801-853-8720.  Make it a great day and a better weekend.

Wednesday, April 6, 2016

Mortgage Bond Market Analysis - FOMC Minutes

It's Hump Day - that would be Wednesday for you non-camel loving folk.  The FNMA benchmark bond closed up 16 basis points yesterday and is down 22 basis points so far today.  Why?  Oil was down yesterday and it's up today - quite a bit at +5.15% currently.  From a technical standpoint, the bond is right at the overbought line as far as the RSI is concerned and at 102.60, it is 5 basis points above the 1st support level.

The big thing that traders are waiting on is what the Fed minutes will show from the March FOMC meeting.  As the saying goes, the devil is in the details and with four of the 17 members pushing for a rate hike, traders ant to know how the discussions went and how solid the doves are.  Based on Yellen's comments last week, she is not keen on increasing rates at the next meeting and maybe for a while - at least until the global economic outlook improves.  On the home-front, we have seen consistently better jobs data as well as improving manufacturing data.  Consumer confidence is strong but consumer spending is still on the week side.

Tomorrow is Jobless Claims Thursday and Friday brings us wholesale inventories.  It's doubtful that either of these will move the market one way or the other.  Oil will likely continue to be the main driver though we could see some movement this afternoon if traders find any surprises in the minutes.  I'll be back Friday with the final post for the week - in the meantime, you can keep up to the minute with what mortgage rates are doing by installing my app, buyerZapp, by clicking on the link in the upper right hand corner of the blog.  I will issue lock / float alerts depending on breaking news that could impact mortgage bonds one way or the other.  For now, I'd lock ahead of the release of the FOMC Minutes just to be safe.  If you decide to float, keep a close eye on the market so that you can lock quickly if rates do move against you.  Make it a great day.

Monday, April 4, 2016

Mortgage Bond Market Analysis - Economic Data and the Final Four

It's Monday and the NCAA Championship game is tonight with North Carolina and Villanova going at it for all the marbles.  Villanova played Oklahoma on Saturday to see who would make it to tonight's game.  They had lost by 20+ points to Oklahoma during the season and because of that, no one would have expected what happened in the rematch - Villanova won the game 95-51; they shot 71.4% from the field while holding Oklahoma to under 32%.  Depending on whether Villanova winning is good for the economy or bad, mortgage bond rates would have either gone up in a big way or gone down big-time.  Of course, that game didn't have much to do with the economy other than at the books in Vegas and in the pockets of those who bet big money of Villanova.

So let's take a look at some data that does mean something for mortgage bonds and interest rates.  Factory Orders came in as expected, down 1.7%.  Labor Market Conditions Index were better than expected at -2.1 (expected -2.4) but worse than the previous reading of 1.5.  Overall, this data is positive for bonds / rates.  Remember that bond prices and interest rates move inversely to one another, which is to say that if traders are buying bonds pushing their prices higher, the rates / yields on those bonds goes down.  Tomorrow we get JOLTS and the ISM Non-manufacturing Index (important).  Wednesday will bring us the FOMC Minutes in which traders will be looking for clues about what the Fed is thinking with regard to when they will raise rates and how much they will likely raise them over the next year or so.

At 102.73, the FNMA benchmark bond is up 5 basis points this morning and is at it's highest level since February 12th which was it's highest point since February 9, 2015.  When I say that rates are great, they really are.  The RSI is showing that bonds are overbought.  A few experts have a float recommendation with a warning to keeping your eye on the market in case of a sell off (if you don't have my app - buyerZapp - you can install it by clicking on the link in the upper right hand corner of the blog) - if you decide to float you run the risk of missing out on some of the recent gains if the bond suddenly sells off and you don't have a way of keeping on top of what's going on.  Oil is down a bit today which is helping the bond in addition to the somewhat weak economic data.  However, with a trend of improving data and oil near its recent lows, I don't know if there's a whole lot of room for bonds to improve.  I would play it safe and take advantage of the current peak and lock.  If you do decide to float, keep your eye on the market.  Contact me if you want up-to-date information regarding the bond and rates - 702-812-1214, 801-853-8720 or

Make it a great day and a better week.

Friday, April 1, 2016

Mortgage Bond Market Analysis - Non-farm Payrolls, Average Hourly Earnings, ISM Manufacturing Index, yada, yada, yada

It's Friday and it's a data-heavy day.  As I wrote in my blog post on Wednesday, the ADP Private Payrolls and the Non-farm Payrolls have been in lock step for the first three months of the year and I expected the same for this month.  We got a strong reading on Wednesday from the ADP Private Payrolls and this morning, Non-farm Payrolls was also strong coming in at 215K vs. estimates of 205K.  Average Hourly Earnings also ticked up more than expected with a delta of .3% vs. estimates of .2%.  The Unemployment Rate is up to 5% which is a bit of an anomaly on the surface since NFP went up but so did the Labor Force Participation rate in the "more people are looking for jobs category.

The March ISM Manufacturing Index is expansionary again at 51.8 vs. estimates of 50.7 - a reading over 50 is expansionary.  The University of Michigan Consumer Sentiment Index came in at 91 which is a bit above expectations of 90.5.  The only real downer in the data this morning is Construction Spending which was -.5% vs. estimates of .1%.  The FNMA benchmark bond is down 21 basis points this morning because of the positive economic data which is putting a dent into yesterday's 35 point gains.  The fact that oil is down somewhat considerably is helping to minimize the losses.  Overall, the benchmark bond is up 75 basis points for the week which means an improvement in rate of a bit over .125% or an improvement in fees of about $1,500 on a $200,000 loan.  With this morning's sell off, the RSI is coming down from overbought levels.  At 102.49, the bond is 21 basis points below the 1st level of resistance and 39 basis points above the 1st level of support - be careful; if oil recovers a bit, it could be bad news for mortgage bonds and interest rates.  I would lock just to be safe.  With the nice gains we still have this week, locking right now is a good thing.  Here's a quick look at the chart:

Next week isn't very data-heavy but there are some key releases each day next week with Factory Orders on Monday, ISM Non-manufacturing on Tuesday, and FOMC Minutes on Wednesday for starters.  You can download my app (buyerZapp) by clicking on the link in the upper right-hand corner of my blog so that you can get current info on the mortgage bond market and real estate news plus I will alert you if bonds begin moving against you so that you have a chance to lock ahead of a reprice.  I'm available throughout the weekend for anyone who needs a pre-approval on a mortgage in Utah or Nevada - 801-853-8720, 702-812-1214 or  Make it a great day and a better weekend.