Mortgage Bond Market Analysis - TGIF and last business day of the month edition

Well TGIF - I love my weekends.  Well surprise, surprise.  We have more conflicting economic data.  I've personally been amazed at how there are so many data points that either contradict each other or just flat out show no consistency with regard to economic growth.  Yesterday we had an about face with the jobless claims numbers coming in very low which means people are getting jobs (or not filing claims for some reason) yet retail sales numbers and the CPI have been low in spite of lower unemployment - you would think that more people with jobs would mean more people with money which would mean more people buying more stuff.  The various consumer confidence / sentiment numbers have all been off the charts lately and you would think that would mean they feel like spending but it's all about the jobs.  If people aren't spending, why are companies hiring?

This morning, GDP was reported at 2.6 - SLOW growth - vs. estimates of 3 and previous of 5.  The Fed will have no reason to raise rates anytime in the near future with the GDP that low and absolutely no signs of inflation.  If people aren't buying, there won't be inflation, hence the low CPI numbers.  The Chicago PMI came in at 59.4 vs. estimates of 58 and previous of 58.3 - that's a strong number but we aren't seeing this translate down the line with the consumers.  Somewhere the train is getting derailed.  My theory is that many consumers aren't consuming, or are only consuming the things they need, because as they get their new jobs, they are just trying to get caught up on bills and they may want to make sure they have some longevity on their job with some savings before they become more liberal with their wallet - or at least the contents thereof.  Here's a snapshot of the mortgage bond market this morning:

The RSI shot up today and is now at an overbought reading.  The FNMA benchmark mortgage bond is currently 4 basis points below the 2nd level of resistance.  Rates are great for people who got an FHA mortgage last year to refinance since they will also benefit from the 50 basis point reduction in the annual mortgage insurance rate.  If you have a loan in process and you are floating, why not take advantage of the recent gains in the bond market and lock in this low rates?

On Tap for Monday:  ISM manufacturing along with personal income and personal spending will be released.  None of these are typically important as far as driving interest rates.

Make it a great weekend.  Who are you rooting for in the Superbowl?  I don't care a heck of a lot either way, I just hope the commercials are good; I know the food's going to be delicious.  Feel free to call me if I can help with a refinance or a purchase mortgage:  702-812-1214.