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Wednesday, September 21, 2016

Mortgage Bond Market Analysis - FOMC Meeting

The Fed interest rate decision has been released and it GOOD news for rates.  With all of the weak data that we've had since the last meeting, it looked for a while like the Fed would likely leave rates unchanged.  In spite of lots of talk immediately after the last meeting that there was a good chance of a rate increase at the September meeting, key economic data beginning the week before jobs week and extending through last week spelled doom for those (the Fed Hawks) who were hoping for a rate hike.

The latest probability from today is that there will be a rate hike in December.  Of course, the actuality of this is predicated on the data and possibly other things like who's elected president.  We'll be hearing from Janet Yellen and her remarks might influence the market a bit more but if what she says is similar to what she's said after recent FOMC meetings, I would expect her comments to have little impact on the market.  The FNMA benchmark bond was about even right before the announcement and is now up 15 basis points at 103.56 - 6 basis points above the 1st level of resistance.  The RSI is also ticking up a bit as you might expect and it is no above the oversold threshold.

I would float for now.  There are a few economic data points tomorrow but I don't think any of them will influence the bond that much.  I'm looking to see how we end the day and if we get any follow-through tomorrow.  Keep a close eye on the market if you float so that you can move quickly to lock if the market moves against you - you can do that with my app (buyerZapp - link in the upper right-hand corner of the blog) or you can always contact me for information - 702-812-1214 or 801-893-1737.  Make it a great day.

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