It's Monday and this week brings a lot more data and potential volatility than we had last week. As I mentioned in my post on Friday, we will get more data including the PPI, CPI and Retail Sales. Oil will probably also play an important roll as will China's GDP which comes out on Friday. These should be the three biggest drivers of interest rate movement this week and you may want to lock ahead of their releases - of course, oil prices fluctuate every day so that's not a release item. Here's what to look for and how it could impact the market.
Retail Sales: We get the data on Wednesday and the market is expecting a nice improvement from February's reading of -.1% with an expectation of .4%. Stronger jobs data as well as rising wages support the notion of better retail sales, however, the consumer credit numbers do not so it is a bit of a guessing game. A strong retail sales number will be bad for mortgage rates while a weak number will be good for rates.
Oil: With a big meeting coming up this Sunday in Qatar, expect oil prices to be very volatile as traders try to guess what's going to happen with regard to oil production based on comments throughout the week by various energy czars from oil producing nations. As sentiment for a freeze in production increases, you can expect oil prices to rise and mortgage bond prices to fall (pushing rates higher). Conversely, if traders believe that a freeze on output isn't likely, expected oil prices to drop and mortgage bond prices to rise. We'll find out the results of the meeting on Monday - I would lock by Friday just in case.
China: Considering the size of China's economy and considering Janet Yellen's comments the last couple of times she has spoken to the press where she has said that the Fed's moves will depend on the strength of the global economy, it's a good bet that if China reports a good GDP, it will not be good for our interest rates as traders will sell bonds based on the belief that the Fed will see an improving global economy as a signal to increase rates.
Import Prices are released tomorrow, the PPI is released on Wednesday along with Business Inventories, the Fed's Beige Book and, of course, Retail Sales. The CPI is released on Thursday in addition to Weekly Jobless Claims. Wednesday and Friday are the big hot points of the week. This morning, the FNMA benchmark bond was down as much as 26 basis points but has rise considerably since then and is currently down only 3 basis points at 102.92 as oil has paired some of its gains. Assuming oil continues to pair its gains, look for bonds to continue to improve. Float with extreme caution and keep your eye on my app (buyerZapp) so that you can move quickly if I issue an alert to LOCK. You can get my app by clicking on the link in the top right corner of the blog. As always, feel free to contact me if I can help in any way and make it a great day and a better week.
Monday, April 11, 2016
Friday, April 8, 2016
Mortgage Bond Market Analysis - Data and Oil
Happy Friday, the day we all look forward to throughout the week unless you're a Realtor or loan officer - we get to work on Saturdays and Sundays for our clients. It's been a light data week and this morning is no exception with the only release being February Wholesale Inventories which came in at -.5 vs. expectations of -.1 and previous of .3. This is a low number and will cause estimates of the GDP to be lowered. Yesterday Jobless Claims came in about as expected but oil started off down a fair amount which lead to traders buying bonds - I sent out an alert to float on my app (buyerZapp) so hopefully you have that app and got the alert.
Wednesday the FNMA benchmark bond closed down 20 basis points, 8 basis points off the low and the market didn't have much of a reaction to the FOMC minutes when they were released; hence, there were no surprises. Yesterday, with the weakness in oil, stocks sold off and bonds were the benefactor. The benchmark bond closed at 102.89, 13 basis points off its high, but still up 27 basis points on the day. The 2nd level of resistance (103.05) was tested and held. At the current price of 102.78, the bond is 5 basis points below the 1st level of resistance and 23 points above the 1st level of support. The RSI (Relative Strength Index) is still above the overbought level so that could add to some selling. Oil started to rebound yesterday afternoon and is continuing its surge this morning as it is up about 10% from yesterday's lows. Here's a look at the mortgage bond chart:
Wednesday the FNMA benchmark bond closed down 20 basis points, 8 basis points off the low and the market didn't have much of a reaction to the FOMC minutes when they were released; hence, there were no surprises. Yesterday, with the weakness in oil, stocks sold off and bonds were the benefactor. The benchmark bond closed at 102.89, 13 basis points off its high, but still up 27 basis points on the day. The 2nd level of resistance (103.05) was tested and held. At the current price of 102.78, the bond is 5 basis points below the 1st level of resistance and 23 points above the 1st level of support. The RSI (Relative Strength Index) is still above the overbought level so that could add to some selling. Oil started to rebound yesterday afternoon and is continuing its surge this morning as it is up about 10% from yesterday's lows. Here's a look at the mortgage bond chart:
As you can see, we have had a see-saw week with Monday, Wednesday and Friday all down and Tuesday and Thursday being up. Currently we are up overall for the week but we'll have to see where it goes from here. Next week we get some key data points with the PPI, CPI, and Retail Sales, among others. There is no data of note on Monday so oil is likely to be the driver and we may very well see a bit of profit taking after the quick run on Monday which could help rates; on the other hand, oil traders may be emboldened to buy more which would push bond prices down further and rates higher. The bond is currently down 16 basis points at 102.73. It is 2 basis points off the low and is testing the 102.70 mark for the 2nd time this morning. If this level holds, we will probably be in a lateral move throughout the rest of the day; if it breaks through this level, we will likely see more selling with a downward trend. At this point, I would float with extreme caution - keep an eye on your phone (make sure you get my app - buyerZapp - via the link in the upper right hand corner of the blog page) for an alert from me if it breaks through this level. I'm available to help with a pre-approval or anything else mortgage related so don't hesitate to contact me - 702-812-1214 or 801-853-8720. Make it a great day and a better weekend.
Wednesday, April 6, 2016
Mortgage Bond Market Analysis - FOMC Minutes
It's Hump Day - that would be Wednesday for you non-camel loving folk. The FNMA benchmark bond closed up 16 basis points yesterday and is down 22 basis points so far today. Why? Oil was down yesterday and it's up today - quite a bit at +5.15% currently. From a technical standpoint, the bond is right at the overbought line as far as the RSI is concerned and at 102.60, it is 5 basis points above the 1st support level.
The big thing that traders are waiting on is what the Fed minutes will show from the March FOMC meeting. As the saying goes, the devil is in the details and with four of the 17 members pushing for a rate hike, traders ant to know how the discussions went and how solid the doves are. Based on Yellen's comments last week, she is not keen on increasing rates at the next meeting and maybe for a while - at least until the global economic outlook improves. On the home-front, we have seen consistently better jobs data as well as improving manufacturing data. Consumer confidence is strong but consumer spending is still on the week side.
Tomorrow is Jobless Claims Thursday and Friday brings us wholesale inventories. It's doubtful that either of these will move the market one way or the other. Oil will likely continue to be the main driver though we could see some movement this afternoon if traders find any surprises in the minutes. I'll be back Friday with the final post for the week - in the meantime, you can keep up to the minute with what mortgage rates are doing by installing my app, buyerZapp, by clicking on the link in the upper right hand corner of the blog. I will issue lock / float alerts depending on breaking news that could impact mortgage bonds one way or the other. For now, I'd lock ahead of the release of the FOMC Minutes just to be safe. If you decide to float, keep a close eye on the market so that you can lock quickly if rates do move against you. Make it a great day.
The big thing that traders are waiting on is what the Fed minutes will show from the March FOMC meeting. As the saying goes, the devil is in the details and with four of the 17 members pushing for a rate hike, traders ant to know how the discussions went and how solid the doves are. Based on Yellen's comments last week, she is not keen on increasing rates at the next meeting and maybe for a while - at least until the global economic outlook improves. On the home-front, we have seen consistently better jobs data as well as improving manufacturing data. Consumer confidence is strong but consumer spending is still on the week side.
Tomorrow is Jobless Claims Thursday and Friday brings us wholesale inventories. It's doubtful that either of these will move the market one way or the other. Oil will likely continue to be the main driver though we could see some movement this afternoon if traders find any surprises in the minutes. I'll be back Friday with the final post for the week - in the meantime, you can keep up to the minute with what mortgage rates are doing by installing my app, buyerZapp, by clicking on the link in the upper right hand corner of the blog. I will issue lock / float alerts depending on breaking news that could impact mortgage bonds one way or the other. For now, I'd lock ahead of the release of the FOMC Minutes just to be safe. If you decide to float, keep a close eye on the market so that you can lock quickly if rates do move against you. Make it a great day.
Monday, April 4, 2016
Mortgage Bond Market Analysis - Economic Data and the Final Four
It's Monday and the NCAA Championship game is tonight with North Carolina and Villanova going at it for all the marbles. Villanova played Oklahoma on Saturday to see who would make it to tonight's game. They had lost by 20+ points to Oklahoma during the season and because of that, no one would have expected what happened in the rematch - Villanova won the game 95-51; they shot 71.4% from the field while holding Oklahoma to under 32%. Depending on whether Villanova winning is good for the economy or bad, mortgage bond rates would have either gone up in a big way or gone down big-time. Of course, that game didn't have much to do with the economy other than at the books in Vegas and in the pockets of those who bet big money of Villanova.
So let's take a look at some data that does mean something for mortgage bonds and interest rates. Factory Orders came in as expected, down 1.7%. Labor Market Conditions Index were better than expected at -2.1 (expected -2.4) but worse than the previous reading of 1.5. Overall, this data is positive for bonds / rates. Remember that bond prices and interest rates move inversely to one another, which is to say that if traders are buying bonds pushing their prices higher, the rates / yields on those bonds goes down. Tomorrow we get JOLTS and the ISM Non-manufacturing Index (important). Wednesday will bring us the FOMC Minutes in which traders will be looking for clues about what the Fed is thinking with regard to when they will raise rates and how much they will likely raise them over the next year or so.
At 102.73, the FNMA benchmark bond is up 5 basis points this morning and is at it's highest level since February 12th which was it's highest point since February 9, 2015. When I say that rates are great, they really are. The RSI is showing that bonds are overbought. A few experts have a float recommendation with a warning to keeping your eye on the market in case of a sell off (if you don't have my app - buyerZapp - you can install it by clicking on the link in the upper right hand corner of the blog) - if you decide to float you run the risk of missing out on some of the recent gains if the bond suddenly sells off and you don't have a way of keeping on top of what's going on. Oil is down a bit today which is helping the bond in addition to the somewhat weak economic data. However, with a trend of improving data and oil near its recent lows, I don't know if there's a whole lot of room for bonds to improve. I would play it safe and take advantage of the current peak and lock. If you do decide to float, keep your eye on the market. Contact me if you want up-to-date information regarding the bond and rates - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Make it a great day and a better week.
So let's take a look at some data that does mean something for mortgage bonds and interest rates. Factory Orders came in as expected, down 1.7%. Labor Market Conditions Index were better than expected at -2.1 (expected -2.4) but worse than the previous reading of 1.5. Overall, this data is positive for bonds / rates. Remember that bond prices and interest rates move inversely to one another, which is to say that if traders are buying bonds pushing their prices higher, the rates / yields on those bonds goes down. Tomorrow we get JOLTS and the ISM Non-manufacturing Index (important). Wednesday will bring us the FOMC Minutes in which traders will be looking for clues about what the Fed is thinking with regard to when they will raise rates and how much they will likely raise them over the next year or so.
At 102.73, the FNMA benchmark bond is up 5 basis points this morning and is at it's highest level since February 12th which was it's highest point since February 9, 2015. When I say that rates are great, they really are. The RSI is showing that bonds are overbought. A few experts have a float recommendation with a warning to keeping your eye on the market in case of a sell off (if you don't have my app - buyerZapp - you can install it by clicking on the link in the upper right hand corner of the blog) - if you decide to float you run the risk of missing out on some of the recent gains if the bond suddenly sells off and you don't have a way of keeping on top of what's going on. Oil is down a bit today which is helping the bond in addition to the somewhat weak economic data. However, with a trend of improving data and oil near its recent lows, I don't know if there's a whole lot of room for bonds to improve. I would play it safe and take advantage of the current peak and lock. If you do decide to float, keep your eye on the market. Contact me if you want up-to-date information regarding the bond and rates - 702-812-1214, 801-853-8720 or jed.wunderli@noblehomeloans.com.
Make it a great day and a better week.
Friday, April 1, 2016
Mortgage Bond Market Analysis - Non-farm Payrolls, Average Hourly Earnings, ISM Manufacturing Index, yada, yada, yada
It's Friday and it's a data-heavy day. As I wrote in my blog post on Wednesday, the ADP Private Payrolls and the Non-farm Payrolls have been in lock step for the first three months of the year and I expected the same for this month. We got a strong reading on Wednesday from the ADP Private Payrolls and this morning, Non-farm Payrolls was also strong coming in at 215K vs. estimates of 205K. Average Hourly Earnings also ticked up more than expected with a delta of .3% vs. estimates of .2%. The Unemployment Rate is up to 5% which is a bit of an anomaly on the surface since NFP went up but so did the Labor Force Participation rate in the "more people are looking for jobs category.
The March ISM Manufacturing Index is expansionary again at 51.8 vs. estimates of 50.7 - a reading over 50 is expansionary. The University of Michigan Consumer Sentiment Index came in at 91 which is a bit above expectations of 90.5. The only real downer in the data this morning is Construction Spending which was -.5% vs. estimates of .1%. The FNMA benchmark bond is down 21 basis points this morning because of the positive economic data which is putting a dent into yesterday's 35 point gains. The fact that oil is down somewhat considerably is helping to minimize the losses. Overall, the benchmark bond is up 75 basis points for the week which means an improvement in rate of a bit over .125% or an improvement in fees of about $1,500 on a $200,000 loan. With this morning's sell off, the RSI is coming down from overbought levels. At 102.49, the bond is 21 basis points below the 1st level of resistance and 39 basis points above the 1st level of support - be careful; if oil recovers a bit, it could be bad news for mortgage bonds and interest rates. I would lock just to be safe. With the nice gains we still have this week, locking right now is a good thing. Here's a quick look at the chart:
Next week isn't very data-heavy but there are some key releases each day next week with Factory Orders on Monday, ISM Non-manufacturing on Tuesday, and FOMC Minutes on Wednesday for starters. You can download my app (buyerZapp) by clicking on the link in the upper right-hand corner of my blog so that you can get current info on the mortgage bond market and real estate news plus I will alert you if bonds begin moving against you so that you have a chance to lock ahead of a reprice. I'm available throughout the weekend for anyone who needs a pre-approval on a mortgage in Utah or Nevada - 801-853-8720, 702-812-1214 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend.
The March ISM Manufacturing Index is expansionary again at 51.8 vs. estimates of 50.7 - a reading over 50 is expansionary. The University of Michigan Consumer Sentiment Index came in at 91 which is a bit above expectations of 90.5. The only real downer in the data this morning is Construction Spending which was -.5% vs. estimates of .1%. The FNMA benchmark bond is down 21 basis points this morning because of the positive economic data which is putting a dent into yesterday's 35 point gains. The fact that oil is down somewhat considerably is helping to minimize the losses. Overall, the benchmark bond is up 75 basis points for the week which means an improvement in rate of a bit over .125% or an improvement in fees of about $1,500 on a $200,000 loan. With this morning's sell off, the RSI is coming down from overbought levels. At 102.49, the bond is 21 basis points below the 1st level of resistance and 39 basis points above the 1st level of support - be careful; if oil recovers a bit, it could be bad news for mortgage bonds and interest rates. I would lock just to be safe. With the nice gains we still have this week, locking right now is a good thing. Here's a quick look at the chart:
Next week isn't very data-heavy but there are some key releases each day next week with Factory Orders on Monday, ISM Non-manufacturing on Tuesday, and FOMC Minutes on Wednesday for starters. You can download my app (buyerZapp) by clicking on the link in the upper right-hand corner of my blog so that you can get current info on the mortgage bond market and real estate news plus I will alert you if bonds begin moving against you so that you have a chance to lock ahead of a reprice. I'm available throughout the weekend for anyone who needs a pre-approval on a mortgage in Utah or Nevada - 801-853-8720, 702-812-1214 or jed.wunderli@noblehomeloans.com. Make it a great day and a better weekend.
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