There was mixed data released today and the benchmark bond is testing the 1st resistance level AGAIN. However, the big news is likely to come from the FOMC meeting this morning. Everyone is looking to get a hint as to when the Fed is going to start raising rates. From all indications, when they do start, it will be very minimal and slow but the big question is when will they start. Most experts, including myself, think that it won't happen today. I think it will happen before the end of the year and it will depend on getting more consistent data that is showing real signs of recovery and growth.
The benchmark bond is currently up 17 basis points at 102.91 and is 5 basis points above the 1st resistance level. This level has been tested each of the four days and it has held firm with the benchmark bond trading above the level but closing below it. Each time it tries and closes below the resistance level, the level grows stronger and we are more likely to see a down trend barring any geo-political disasters or negative economic data that shows an about face in our economy.
The FOMC decision on rates will be released around 2:15 EDT. You may want to lock ahead of the decision since traders could easily take whatever decision the Fed makes and justify selling which would mean higher rates. My guess is that if we can get a more substantive idea about when they will start raising rates, we might see some buying in the bond market in the short term. The RSI is approaching the midway point between overbought and oversold even though we closed down slightly yesterday after being up slightly most of the day. Feel free to call me if I can help with anything mortgage related: 702-812-1214. Make it a great day.
Tuesday, June 16, 2015
Monday, June 15, 2015
Mortgage Bond Market Analysis - Green Day
It's Monday and so far it's GREEN. Over the last nine days with one exception, we have alternated between up days which are green (good for rates) and down days which are red (bad for rates). Some of those down days had data that showed weakness in the economy and the bond market still sold off. Of course on the good economic days the opposite wasn't necessarily the case all the time. That said, we had a great day on Friday in spite of some better than expected data including some inflationary PPI numbers. The benchmark bond is up slightly this morning, currently up 9 basis points but is off it's high for the day by 17 basis points.
I would float with caution and be ready to lock should the market make a sudden move. The RSI is slightly above oversold the first level of resistance at 102.86 is proving to be strong as the benchmark bond has tested it each of the last three days and lost. It is currently 1 basis point above the resistance level. Closing some decent amount above the resistance level would be a good thing and could be a good sign for the near term. Closing below it might show that traders are looking for more reason to sell off and would do so with more positive data.
Please feel free to reach out to me via email (jed.wunderli@noblehomeloans.com) or by cell (702-812-1214). I'm happy to help however I can. Make it a great day.
I would float with caution and be ready to lock should the market make a sudden move. The RSI is slightly above oversold the first level of resistance at 102.86 is proving to be strong as the benchmark bond has tested it each of the last three days and lost. It is currently 1 basis point above the resistance level. Closing some decent amount above the resistance level would be a good thing and could be a good sign for the near term. Closing below it might show that traders are looking for more reason to sell off and would do so with more positive data.
Please feel free to reach out to me via email (jed.wunderli@noblehomeloans.com) or by cell (702-812-1214). I'm happy to help however I can. Make it a great day.
Friday, June 12, 2015
Mortgage Bond Market Analysis - TGIF
The bond market has been a bit backwards yesterday and today. The economic data that came out yesterday and today was mostly positive and yet we had a fantastic day yesterday as far as the benchmark bond (FNMA) was concerned - up 69 basis points. The bond broke through the 1st resistance level and backed off a bit closing right at the the 1st resistance level - 102.86. This morning, despite more good / better than expected data, the bong tested the 2nd level of resistance climbing as high as 103.1 (3 basis points below the 2nd level of resistance) and sold off. The FNMA benchmark bond is currently up 8 basis points and the GNMA (FHA and VA) is down 4 basis points. The RSI (Relative Strength Index is now slightly above the oversold line after yesterday's big move. Here's a snapshot of the chart:
I always like to lock on a good up day or after a nice run if the bias is there. In a situation like this where the data seems to be more positive than negative and we are seeing a bias toward selling, I would lock on any upward movements and float the rate down if the buying continues. There's at least one bond analyst who thinks we could be in for more selling. Matt Graham thinks that the recent sell-off since the first of May might only be the 1st half of the actual run which means we could see much more selling sooner rather than later. If that's the case, locking now would be the absolute right thing to do.
Feel free to call me if I can help with anything mortgage-related - 702-812-1214. Make it a great day and a better weekend.
I always like to lock on a good up day or after a nice run if the bias is there. In a situation like this where the data seems to be more positive than negative and we are seeing a bias toward selling, I would lock on any upward movements and float the rate down if the buying continues. There's at least one bond analyst who thinks we could be in for more selling. Matt Graham thinks that the recent sell-off since the first of May might only be the 1st half of the actual run which means we could see much more selling sooner rather than later. If that's the case, locking now would be the absolute right thing to do.
Feel free to call me if I can help with anything mortgage-related - 702-812-1214. Make it a great day and a better weekend.
Tuesday, June 9, 2015
Mortgage Bond Market Analysis - Make Up Your Mind!!
Like a roller-coaster, the bond market has capitulated wildly the last 4 days. After recovering a bit yesterday, closing up 30 basis points, the benchmark bond is currently down 26 basis points. There was some good economic news this morning, which is rarely good for bonds. The JOLTS report which tells about the job openings came in higher than expected at 5.376mil vs. 5.038 expected. The wholesale inventories grew which could mean that businesses expect to sell more product or that sales aren't keeping up with product. Time will tell. Finally, the NFIB Business Optimism Index came in at 98.3 vs. estimates of 97.2. This typically doesn't have a huge impact on bond prices but it is a slight negative and the overall data is negative for pricing.
Rates are still great with FHA and VA loans in the low 4% range and paying some closing costs. With a continually improving economy, I think rates are going to trend up. We will have some opportunities to lock at lower points and when the Fed starts raising the Fed Funds rate, that may be one of those times. Other times to lock will be when there's a big miss on economic data that impacts bond pricing such as most jobs-oriented reports. Additionally, any major global incident like war will also be good as bonds are a safe-haven for investors. With rates trending up, you may want to consider a long term lock if you are planning on buying in the next year - we can lock your loan for up to 1 year. If you are in process, you may want to lock now to protect yourself from anymore downward movement in bond prices (higher rates) as long as you have the ability with your current lender to float the rate down if investors start buying bonds and pushing prices up.
The good news is that the benchmark bond is oversold AND the 2nd level of support (102.87) is holding relatively firm although the benchmark bond is currently 7 basis points below this support level and it is down 36 basis points on the day. If it closes below the support level we may see some follow-through selling tomorrow, especially given the current level of the 10 year treasury bond which is at it's highest level (yield) in 8 months. I would be safe and lock; if prices improve and rates go down, then float down or re-lock with another lender. Feel free to contact me if I can help you with anything mortgage-related - 702-812-1214. Make today great.
Rates are still great with FHA and VA loans in the low 4% range and paying some closing costs. With a continually improving economy, I think rates are going to trend up. We will have some opportunities to lock at lower points and when the Fed starts raising the Fed Funds rate, that may be one of those times. Other times to lock will be when there's a big miss on economic data that impacts bond pricing such as most jobs-oriented reports. Additionally, any major global incident like war will also be good as bonds are a safe-haven for investors. With rates trending up, you may want to consider a long term lock if you are planning on buying in the next year - we can lock your loan for up to 1 year. If you are in process, you may want to lock now to protect yourself from anymore downward movement in bond prices (higher rates) as long as you have the ability with your current lender to float the rate down if investors start buying bonds and pushing prices up.
The good news is that the benchmark bond is oversold AND the 2nd level of support (102.87) is holding relatively firm although the benchmark bond is currently 7 basis points below this support level and it is down 36 basis points on the day. If it closes below the support level we may see some follow-through selling tomorrow, especially given the current level of the 10 year treasury bond which is at it's highest level (yield) in 8 months. I would be safe and lock; if prices improve and rates go down, then float down or re-lock with another lender. Feel free to contact me if I can help you with anything mortgage-related - 702-812-1214. Make today great.
Monday, June 8, 2015
Mortgage Bond Market Analysis - What the heck just happened?
It's a Monday and in this case, that's a good thing. Last week was a really downer, literally, for the benchmark bonds which means rates went up. Between world events and some positive economic data, the FNMA benchmark bond sold off 167 basis points which means that rates went up about .375%. The Labor Market Conditions Index came in at 1.3 vs. the expected 2.3 but this isn't a big deal as far as bond pricing is concerned. There will be some more date released throughout the week that can have more of an impact on mortgage bonds. The good news is that the benchmark bond is currently oversold so we could see some buying on that factor alone. Here's a look at the chart:
We haven't closed that low since October 6th of last year and we were pretty close to that point on November 12th. We are almost 7 months removed from November 12th and still seeing very mixed results in the economy. I don't think we will see a continual rapid rise in rates. There is too much ambiguity in the market. Experts are still calling for a correction in the stock market of 10-15% which will impact bonds, most likely in a positive way since the money typically flows out of stocks into the safe haven of bonds in scenarios like a market correction.
Additionally, a Fed rate hike of any magnitude, and I don't know of any experts advocating rate hikes soon or that are big, will probably help interest rates as well as it will make investors in the stock market a bit uneasy which means more money will likely flow to the safe haven of bonds again. At this time, I would float with caution. We've had a big sell-off that doesn't appear likely to continue at this point and we may see some buying in the bond market as investors see this as an opportunity to buy bonds at a good price. Be very judicious about watching the bond movement as they dictate rates. Call me if I can help with anything mortgage related: 702-812-1214.
We haven't closed that low since October 6th of last year and we were pretty close to that point on November 12th. We are almost 7 months removed from November 12th and still seeing very mixed results in the economy. I don't think we will see a continual rapid rise in rates. There is too much ambiguity in the market. Experts are still calling for a correction in the stock market of 10-15% which will impact bonds, most likely in a positive way since the money typically flows out of stocks into the safe haven of bonds in scenarios like a market correction.
Additionally, a Fed rate hike of any magnitude, and I don't know of any experts advocating rate hikes soon or that are big, will probably help interest rates as well as it will make investors in the stock market a bit uneasy which means more money will likely flow to the safe haven of bonds again. At this time, I would float with caution. We've had a big sell-off that doesn't appear likely to continue at this point and we may see some buying in the bond market as investors see this as an opportunity to buy bonds at a good price. Be very judicious about watching the bond movement as they dictate rates. Call me if I can help with anything mortgage related: 702-812-1214.
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