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Friday, June 10, 2016

Mortgage Bond Market Analysis - The End of a Quiet Week

It's Friday and the end of a quiet week in the mortgage bond market.  The FNMA benchmark bond is currently down 4 basis points which means it's down 2 basis points for the week.  It was down 14 on Monday, up 6 on Tuesday and 14 on Wednesday and then down 4 yesterday.  In other words, the benchmark bond is trading in a very tight range and hasn't really been able to break out above the 102.79 resistance level.  I think we will continue to remain in this tight range until after the FOMC meeting next week where most experts believe that the Fed will NOT raise rates.  Count me in the camp of those who believe the Fed will postpone a rate increase at least until the end of July and maybe even until September BUT I would hate to be on the wrong side of that bet if you are floating and rates are so great anyway like they are right now.

Yesterday, Jobless Claims came in slightly better than expected and Wholesale Inventories came in much stronger than expected at .6% vs. estimates of .1%.  This morning, the Consumer Sentiment Index came in at 94.3 vs. estimates of 94.  None of this gives bond traders any reason to make a big move (buy or sell) and it certainly doesn't give the Fed reason to raise the Fed Funds rate, especially considering the other data we've seen since the last FOMC meeting.  If you are going to float, make sure you have my app - buyerZapp - which you can download by clicking on the link in the upper right-hand corner of my blog.  The app will help you react quickly to a big sell-off in mortgage bonds that might allow you to lock before a reprice for the worst.

Make it a great day and a better weekend.  If you need me for anything mortgage related - a guideline question, pre-approval or anything else - please feel free to call me; I'm here to help in any way I can.

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