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Monday, August 8, 2016

Mortgage Bond Market Analysis - Roller Coaster Ride

Happy Monday.  I'm back to civilization after spending the last 4 days at Panguitch Lake fishing and camping with family and friends.  We got rained on VERY hard on Thursday but had lots of fun and caught lots of fish and ate lots of great food.

With my computer in hand and internet service, I can share the news of what's happening with mortgage bonds.  On Friday, we got the last of the jobs data with July NFP BLOWING away expectations of 180K and coming in at 255K.  June's NFP was revised upward to 292K from 287K and Average Hourly Wages also came in hotter than expected as they were up .3% vs. expectations for an increase of .2%.  This was all negative for pricing and the traders acted accordingly by selling off the FNMA benchmark bond as it closed down 38 basis points for the day, erasing the 35 basis point gain from the prior two days.  If you've read my blog for very long, you know that I typically recommend locking before the beginning of the jobs data (or any other data that could move the market) - this is why.

This morning there is no real data to speak of and the bond was higher by as much as 13 basis points at 103.79, getting above the 1st level of resistance by 4 basis points but has sold off a bit and is now only up 5 basis points for the day at 103.71.  Rates remain fantastic and if you missed your chance to lock before Friday's sell-off, your penalty isn't that bad since you can still lock a fabulous rate.  There's no real reason to float, though it's probably not bad if you aren't in a position to lock or just want to see if you can get a little improvement - the RSI is below the overbought threshold and we did just have a decent sell-off on Friday.  That said, if my loan was ready to lock, I'd lock and not worry about what the market does any more.

This will be my only post for this week since I'll be back on a short vacation with my family starting tomorrow and going through Saturday.  In my absence, you can download buyerZapp which will keep you up to date on economic data and how it's impacting interest rates and you'll also have the interest rate trend meter.  You can get the app by clicking on the link in the upper right hand corner of my blog.  Make it a great day and a better week.  I'll be back next Monday with more information.  

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