It's Jobless Claims Thursday which means more data to draw on. I'm a big sports fan and I've coached a fair amount of basketball over the years. I've also played a number of different sports either competitively or recreationally (though I'm always competitive). In about every sport I can think of, follow-through is very important in one way or another whether it's your shot in basketball, your throwing motion in baseball or football, or your swing in golf and tennis. If you don't have proper follow-through, you aren't going to have the success you want. In the financial markets, one nice day is good, but if there's no follow-through the next day, there is no real direction and it's next to impossible to have an educated guess as to what the market will do, what the trend will be.
From July 29th through September 6th, the mortgage bond market traded in a very tight range and there was never more than two consecutive days of buying or selling during that period and there wasn't a single day of really decisive movement. Since then, we still haven't had any HUGE days with the biggest day being a down day where the FNMA benchmark bond sold off 36 basis points on September 9th - the 3rd of three consecutive days of selling. That day was followed by alternating days of buying and selling - one each which was followed by three consecutive days of buying with the third day being the smallest gainer - 1 basis point. Monday ended that little "rally" with a sell-off of 19 basis points. Our last three days have been gains of 11 and 16 basis points and we are currently up 27 basis points in our 3rd day. We have blown through the new (higher) 1st level of resistance (103.65) and are currently 3 basis points above the 2nd level of resistance (103.81) at 103.84. With this move, the RSI is inching toward the overbought threshold and would probably reach it tomorrow with another day of buying - possibly today if we close up 40+ basis points.
Mixed Data Today
The data was mixed today with Jobless Claims (both Initial and Continuing) coming in better than expected while Existing Home Sales and Leading Economic Indicators came in below expectations with the LEI coming in at -.2 showing more weakness in the economy.
There is no data tomorrow and with a Fed rate increase thought to be pushed back at least until December, I think there a decent chance that traders will continue buying tomorrow unless they decide to take some profits before the weekend. July 29th also happened to be the last time we had a 4-day winning streak with the selling on July 30th ending that streak. For now, I would continue to float, but do so with caution. If you have a loan closing in 15 days or less, lock, otherwise keep an eye on the market so that you can react quickly should the market turn against you. As always, I'm happy to help in anyway I can; feel free to contact me at 801-893-1737 or 702-812-1214.