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Tuesday, November 1, 2016

It's Jobs Week and the FNMA Benchmark Bond Continues Its Slide

It's Tuesday of Jobs Week and the FNMA benchmark bond continues its slide with the October ISM Manufacturing Index coming in a bit hotter than expected at 51.9 vs. 51.7 - anything over 50 is expansionary so this is good for the country, not so good for interest rates if you are getting a mortgage and haven't locked yet.  Tomorrow we get our first jobs report with ADP Private Payrolls.  We also get the Fed Interest Rate decision but nobody expects the Fed to make any move tomorrow.  We are hoping for some type of guidance with regard to the December meeting which is when many experts think they could make their next move with another increase; it is not a sure thing by any means as the Fed will be looking to see how the economy does between now and then as well as looking to see how the financial markets react to the elections.

Thursday we get Jobless Claims along with the ISM Non-manufacturing index (service sector) which has been strong even when the manufacturing side has been weak.  Friday we get Non-farm Payrolls and the Unemployment Rate along with a couple of less important data points.  The 10-year Treasury is above a key level and that isn't helping mortgage bonds but the one good thing is the RSI (Relative Strength Index) is below the oversold threshold.  another good thing is that so far this morning, the 2nd level of support has held up when the bond tried to break through.  One more good thing is that the bond is currently at the lowest level it's been at since June 24th - that's over 4 months.  These things could indicate that bond traders might take a risk and start buying bonds thinking that there could be a little run.  The other side of that philosophy is that at the current price, the benchmark bond is at a very tenuous point with not much support other than what I mentioned above; all of the moving average support levels are above the current price and would act as resistance to the bond moving progressively higher.  Here's a look at the current chart:

In my post on 10/18, I recommended locking.  Since then, the bond has sold off 49 basis points based on its current price and with all that's going on right now I will continue with my lock recommendation if you (or a client or friend) are in a position to lock; if you have to float or decide to float, keep a close eye on the market by installing my app (buyerZapp) with the link in the upper right-hand corner of my blog or you can always contact me for current information regarding bond prices and interest rates:  801-893-1737 or 702-812-1214.  

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