Mortgage Bond Market Analysis - Mirror edition

TGIF.  It's been quite the week, mostly for personal reasons.  My family has been waiting for yesterday to come for a couple of months.  My daughter applied to go to the University of Utah in mid-November and has been on pins and needles wondering if she would be accepted - until yesterday when the letter came letting her know that she has been accepted.  She was as excited as could be and is now progressing through the steps to get ready to be a student there in the fall.  But I digress, proud father as I am.

Yesterday also brought a very strong up day in the market with the FNMA benchmark bond climbing 73 basis points.  This morning, with no strong economic data and a stock market that isn't doing much either, the benchmark bonds - both FNMA and GNMA - are selling off in a big way with the FNMA down 69 and the GNMA down 80 (more than it was up yesterday).  The CPI (ex-food and energy) came in below expectations (+.1) at 0.0.  The CPI including food and energy came in at -.4.  This is non-inflationary and one would think that this would be good for bonds since it means the economy isn't exactly lighting the world on fire.  Additionally, bond are thought to be a good safe investment in times with little inflation whereas investors tend to want to invest in stocks when inflation is more prevalent because they want an investment that will keep up with inflation.

Not to say "I told you so" but if you read my posts on a regular basis you know that I recommend locking on big up days and have recommended locking to take advantage of the recent run-up; I often say "don't be greedy."  I have also said that even with a big down day like we are having today, there's no reason to panic or feel like you've missed out if you hadn't locked because rates are still great.  Here is the chart:

What's on tap for next week?  Monday's a holiday and the week is extremely light on the data front - the only thing I see on the schedule is the jobless claims numbers on Thursday so investors will look to the stock market and the global economy for direction.  I will be in Salt Lake City on business so may not be able to write my regular posts.  Please feel free to contact me at 702-812-1214 if I can help with anything mortgage-related and don't forget to like The Wunderli Team facebook page to get intraday updates on interest rates as well as other mortgage news.  Make it a great weekend.