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:

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.