5/31/2017 - End of the Day/Month Market Update

The 10-year yield briefly dropped below 2.20%, that key technical floor market participants will be watching

if there's a material volume move to a new range. MBS traded sideways throughout the day, closing flat.

Tomorrow may be more eventful with a handful of meaningful economic data releases including ADP employment data and ISM manufacturing indices.  Watch for any news on the Paris climate accord to signal the beginning of potential trading rifts with Western Europe as well.

05/30/2017 - Weekly Market Update

What's going on and why does it matter?

Mortgage bonds opened flat today in a quiet start to this holiday-shortened trading week.  The Fed is scheduled to purchase a sizable $1.45 billion in 30-year conventional mortgage bonds today, so that may help to keep bond prices elevated.  It seems that mortgage bonds may continue to drift sideways in a range between their 30-day and 200-day moving averages.  The personal income report for April came out this morning in line with market expectations, although the PCE inflation numbers for April were elevated. Later this week the market will be digesting the all-important non-farm payrolls report.


What should you do about it?
 
Lock your rate to be safe, especially while mortgage bonds continue to trade near the top of their recent range.

Economic reports that may impact mortgage rates this week:

Date	Report	Period	Prior	Estimate	Actual
Tue 30 May	Personal Income	Apr	0.2%	0.4%	0.4%
Tue 30 May	Core PCE Price Index	Apr	-0.1%	0.1%	0.2%
Tue 30 May	Consumer Confidence	May	120.3	119.8
Thu 1 Jun	ADP National Employment	May	177,000	180,000
Thu 1 Jun	Initial Jobless Claims	Week of May 22	234,000	238,000
Thu 1 Jun	Construction Spending	Apr	-0.2%	0.5%
Thu 1 Jun	ISM Mfg. PMI	May	54.8	54.6
Thu 1 Jun	Total Vehicle Sales	May	16.88M	16.9M
Fri 2 Jun	Non-Farm Payrolls	May	211,000	182,000
Fri 2 Jun	Average Earnings	May	0.3%	0.2%

Friday, May 26, 2017

What's going on and why does it matter?
 
Today's durable goods and GDP numbers came out stronger than market expectations, while core PCE inflation is higher than it's been in quite some time.  This continues to lay the groundwork for a Fed rate hike in June, and the unwinding of their massive mortgage bond buying program at some point this year.  This news would normally cause bond prices to decline and mortgage pricing to get worse, which may very well happen being that mortgage bonds are trading near the top of their recent range.

However, the market's reaction may be tempered today for three reasons. First, the Fed's likely reaction may already be priced in to current market prices.  Second, the Washington DC drama seems to be rekindling on reports that the FBI was looking into President Trump’s son-in-law Jared Kushner’s interactions with Russia. Third, financial market investors may be extra cautious ahead of the long 3-day weekend.  The Fed is scheduled to purchase up to $1.2 billion of GNMA mortgage bonds this morning. The bond market closes early today and it's closed on Monday for the Memorial Day holiday.

What should you do about it?
 
Lock your rate to be safe, especially while mortgage bonds continue to trade near the top of their recent range.

Thursday, May 25, 2017

What's going on and why does it matter?

Mortgage bonds opened flat this morning after rebounding off their 30-day moving average yesterday.  

**The Fed minutes came out yesterday afternoon and indicated that the Fed will be taking a “gradual” and “controlled” approach to unwinding it's 9-year mortgage bond buying program. 

The bond market cheered this news because it means that the Fed is likely to stay involved in the market to at least some degree throughout the remainder of this year.  As for today, the Fed's mortgage bond buying is limited to $700 million of 15-year conventional mortgages.

What should you do about it?
Watch for mortgage bonds to continue trading in a range between their 30-day and 200-day moving averages; but be prepared to lock your rate quickly if the market changes directions.