Happy Monday. We've got three things that are impacting the market and two of the three are impacting the FNMA benchmark bond in a negative way. Oil continues it's run in spite of increasing supplies and this is having a negative impact. Conversely, the New York Empire Manufacturing Index missed expectations in a HUGE way, coming in at -9.02 vs. estimates of +6.5 and previous of +9.56. This is providing a bit of support for the bond while the NAHB Housing Market Index missed its estimates of 59 with a reading of 58 which is the same as last month and still a strong number. With two of the three things being strong, the benchmark bond is down 12 basis points after being up 16 basis points on Friday.
At 102.60, it is 14 points below the 1st level of resistance and 16 points above the 1st level of support. The RSI has been very sensitive the last couple of days and is currently hovering just above the midway point between overbought and oversold. Tomorrow we get Building Permits, Housing Starts and the all important CPI which is expected to be hotter than last month's reading in all four number but one - the YOY ex-Food and Energy - the most important. Expectations for this are 2.1 vs. previous of 2.2. Wednesday brings us Capacity Utilization, Industrial Production and the highly important FOMC Minutes where bond traders will be looking for any details that might provide them with a hint of what the Fed might do at the next meeting. Thursday brings us Jobless Claims, the Philadelphia Fed Manufacturing Survey and Leading Economic Indicators and Friday we get Existing Home Sales. For now, I'd float with extreme caution - keep an eye on buyerZapp so that you can lock quickly if the market makes a decisive move in the wrong direction. You can get buyerZapp by clicking on the icon in the upper right corner of my blog.
Based on the news I'm reading regarding oil, I have to believe it is at or near a top. When traders decide to sell off, this will help rates get even better and they are VERY good right now. If oil gets back into the $30s, look for a nice improvement in rates, assuming the Fed isn't raising the Fed Funds rate around that same time or that there isn't a lot of other economic data to offset the falling oil prices. I'm always happy to help with any mortgage-related questions or with a pre-approval. Make it a great day.