Happy Tuesday. The bond markets were closed yesterday for Columbus Day but are swinging back into action today. The FNMA benchmark bond was down as much as 31 basis points before doing an about-face - it is now down only 8 basis points as the first level of support at 103.3 held strong. The flip side is that the first level of resistance (103.55) also seems to be strong as well. The RSI is oversold so there could be some buying but would it be enough to push through the resistance level? The sooner the better since the first resistance level is only two days old and may not be all that strong yet.
From a data standpoint, Non-farm Payrolls came in at 156K for September vs. estimates of 175K. This is over a 10% miss and it's also somewhat week for an economic recovery. That said, August NFP numbers were revised upward to 167K from 151K - a 10% upward revision so that helps to offset the miss. Additionally, the Unemployment rate came in at 5% which is higher than last month's reading of 4.9% and while that might be bad in some cases, in this case, it's actually a positive because of the increase in the Labor Participation Rate. Average hourly wages came in as expected at +.2%.
If you or a client / friend have a loan in process, you might want to think about locking. I'm not sure that there will be any big moves upward in bond prices which would push rates lower. There's a decent likelihood that the benchmark bond will be trading in a very tight range. You can lock now and take advantage of the great rates that still exist or you can float and if the RSI is accurate - it isn't always a great indicator - then you could pick up some better pricing if the bond trends up in the near future. As always, I'm happy to help any way I can. Make it a great day and a better week.