The stock market resumed its bullish ways to end the week higher on firming oil prices and softer than anticipated inflation news.  The feeble inflation data coupled with disappointing economic news also helped to push Treasury prices higher and yields lower for the week.

 

Retail Sales for June fell for the second straight month, coming in below expectations at -0.2%. Economists had forecast June sales growth of 0.1%.  This weaker consumer spending will also have a negative influence on upcoming GDP models for the second quarter.  The Atlanta Fed’s GDPNow model forecast moved lower on Friday to 2.4% from 2.6% on Tuesday following the Retail Sales report.  Consumer sentiment is also sliding lower with the preliminary July reading of the University of Michigan’s Consumer Sentiment Index falling to 93.1 when analysts were expecting 95.1.

 

Core inflation at both the producer and consumer levels was reported below consensus forecasts at 0.1%.  Economists had expected core inflation at 0.2% for both.  This may cause the Federal Reserve to think twice about raising interest rates in December when Fed watchers next expect a rate hike.  In fact, Fed Chair Janet Yellen during her Wednesday testimony before the House Financial Services Committee referred to the recent weakness seen in inflation data by stating “monetary policy is not on a preset course” and “the Committee will be monitoring inflation developments closely in the months ahead.”  Also, Dallas Fed President and FOMC voting member Robert Kaplan stated he wants “greater evidence” of rising inflation before hiking rates again.

 

There were no economic reports from the housing sector other than the latest mortgage application data.  Application volume decreased during the week ending July 7.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 7.4%.  The seasonally adjusted Purchase Index decreased 3.0% from the prior week while the Refinance Index decreased 13% to its lowest level since last January.

 

Overall, the refinance portion of mortgage activity decreased to 42.1% of total applications from 44.9% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.7% of total applications from 7.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.22% from 4.20% with points increasing to 0.40 from 0.31.

 

For the week, the FNMA 3.5% coupon bond gained 21.9 basis points to close at $102.63.  The 10-year Treasury yield decreased 5.37 basis points to end at 2.3319%.  Stocks ended the week moderately higher.

 

The Dow Jones Industrial Average rose 223.40 points to close at 21,637.74.  The NASDAQ Composite Index advanced 159.39 points to close at 6,312.47 and the S&P 500 Index gained 34.09 points to close at 2,459.27.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 9.49%, the NASDAQ Composite Index has advanced 17.26%, and the S&P 500 Index has risen 9.85%.

 

This past week, the national average 30-year mortgage rate fell to 4.06% from 4.13%; the 15-year mortgage rate decreased to 3.34% from 3.38%; the 5/1 ARM mortgage rate increased to 3.22% from 3.20%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.35% from 4.40%.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

The stock market traded in a rather subdued fashion on Tuesday and Wednesday in a holiday shortened week before jumping higher on Thursday and Friday.  Stocks advanced Thursday following news the U.S. is pulling out of the Paris Climate Accord that was seen as having a destructive impact on the U.S. economy while bond prices modestly declined.  On Friday, both stocks and bonds reacted positively to the May Employment Situation Summary (jobs report).  The Goldilocks report was not too “hot” and not too “cold” – it was just right enough to pacify the bears.

 

While the headline nonfarm payrolls number was reported at 138,000, it easily missed the consensus forecast of 185,000 as did nonfarm private payrolls at 147,000 versus 172,000 expected.  Furthermore, each of the last two monthly job gains were downwardly revised with March’s payroll growth losing 29,000 while April’s gains dropped by 37,000 jobs.  Average hourly earnings also missed the consensus forecast with a 0.2% increase versus expectations of 0.3%.

 

The one encouraging piece of data was the unemployment rate falling to a 16-year low of 4.3%.  Also, the underemployment rate, which adds those who are working part-time but would prefer full-time work, fell to 8.4% from April’s reading of 8.6%.  Gary Cohn, President Trump’s chief economic advisor, has stated in recent months that the administration is concentrating on bringing the underemployment rate lower.

 

There were no housing reports released during the week other than the latest mortgage data.

Mortgage application volume declined during the week ending May 26.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell 3.4%.  The seasonally adjusted Purchase Index dropped 1.0% from the prior week, while the Refinance Index decreased 6.0%.

 

Overall, the refinance portion of mortgage activity decreased to 43.2% total applications from 43.9% from the prior week.  The adjustable-rate mortgage share of activity decreased to 7.7% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance remained unchanged at 4.17% with points decreasing to 0.32 from 0.39.

 

For the week, the FNMA 3.5% coupon bond gained 31.2 basis points to close at $103.38 while the 10-year Treasury yield decreased 9.09 basis points to end at 2.159%.  Stocks ended the week higher.

 

The Dow Jones Industrial Average added 126.01 points to end at 21,206.29.  The NASDAQ Composite Index advanced 95.61 points to close at 6,305.80 and the S&P 500 Index gained 23.25 points to close at 2,439.07.

 

Year to date on a total return basis, the Dow Jones Industrial Average has gained 7.31%, the NASDAQ Composite Index has advanced 17.14%, and the S&P 500 Index has risen 8.94%.

 

This past week, the national average 30-year mortgage rate fell to 3.98% from 4.02%; the 15-year mortgage rate declined to 3.24% from 3.28%; the 5/1 ARM mortgage rate dropped to 3.04% from 3.09%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates decreased to 4.27% from 4.30%.

 

Economic Calendar – for the Week of June 5, 2017

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Jun 05 08:30 Revised 1st Quarter Productivity Qtr. 1 -0.2% -0.6%
Jun 05 08:30 Revised 1st Quarter Unit Labor Costs Qtr. 1 2.4% 3.0%
Jun 05 10:00 Factory Orders Apr -0.2% 0.2%
Jun 05 10:00 ISM Services Index May 57.0 57.5
Jun 06 10:00 JOLTS Job Openings Apr NA 5.743M
Jun 07 07:00 MBA Mortgage Applications Index 06/03 NA -3.4%
Jun 07 10:30 Crude Oil Inventories 06/03 NA -6.43M
Jun 07 15:00 Consumer Credit Apr $15.0B $16.4B
Jun 08 08:30 Initial Jobless Claims 06/03 240,000 248,000
Jun 08 08:30 Continuing Jobless Claims 05/27 NA 1,915K
Jun 09 10:00 Wholesale Inventories Apr -0.1% 0.2%

 

 Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($103.38, +31.2 bp) traded within a narrow 47 basis point range between a weekly intraday high of $103.47 on Friday and a weekly intraday low of $103.00 on Thursday before closing the week at $103.38.

 

The bond moved only eight basis points higher from Tuesday through Thursday until jumping 24 basis points higher on Friday following a rather benign May Situation Summary (Jobs Report).  Friday’s trading powered the bond above a tough dual layer of overhead resistance at the 200-day moving average (103.24) and prior resistance at 103.297.  These levels should serve as nearest technical support.  If these support levels can manage to hold in the coming week, the bond could take out resistance at Friday’s intraday high of 103.469.  Further resistance lies considerably higher at the 23.6% Fibonacci retracement level at 103.967.  However, further movement to the upside will be difficult as the slow stochastic oscillator is at an extreme level suggesting a pending pullback in upward momentum.  Mortgage rates should hold fairly steady in the coming week.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

May 1, 2017

The stock market continued to march ever higher, especially early in the week when both the small-cap Russell 2000 and the technology-laden Nasdaq Composite Indexes reached record highs.  In fact, the Nasdaq Composite broke above the 6,000 mark for the first time ever.  Investor sentiment was enhanced in response to the election results in France when pro-European Union globalist Emmanuel Macron received more votes than anti- European Union nationalist Marine Le Pen during the first round of presidential elections.  The two candidates will now square off in a runoff election on May 7.

 

However, other political developments both here and abroad managed to keep investors wary.  President Trump’s proposal for meaningful tax reform, threats to pull out of NAFTA, a revised plan repeal and replace Obamacare (The Affordable Care Act), and escalating tensions between the U.S. and North Korea over the North Korean’s ballistic missile testing all combined to impact investor sentiment.

 

Bond yields crept higher as talk of potential tax cuts negatively impacted Treasury prices early in the week.  The yield on the 10-year Treasury reached its highest level in over two weeks on Wednesday, before pulling back as investors contemplated the possibility of a potential government shutdown.

 

In housing, the spring home selling season got off to a great beginning as New Home Sales soared to an 8-month high in March.  The Commerce Department reported New Home Sales at a seasonally-adjusted annual rate of 621,000 for March, easily exceeding the consensus forecast of 590,000.  March sales were the second-strongest since early 2008, and were just slightly lower than last July’s reading of 622,000 while being 15.6% higher than a year ago.  The median home sales price increased 1.2% to $315,000 and is 1.2% higher compared to a year ago while the average sales price increased 5.6% to $388,200.  Inventory continues to slide and at the current rate of sales, it would take just 5.2 months to exhaust available supply.

 

Home prices continue to march steadily higher and this was confirmed by both the Federal Housing Finance Agency (FHFA) and S&P/Case-Shiller.  The FHFA monthly House Price Index (HPI) for February showed home prices rose 0.8% in February and 6.4% annually in addition to an upward revision in January’s index to 0.2%.  The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.  Meanwhile, the S&P/Case-Shiller National Home Price Index soared 5.8% in February, the largest gain in 32 months, when analysts had predicted a 5.7% increase.  This is further evidence strong home buyer demand continues to outweigh supply in the housing market.

 

Furthermore, the National Association of Realtors reported March Pending Home Sales, based upon contract signings, retreated 0.8% to 111.4 from 112.3 in February.  This slight loss in sales momentum was due to the scarcity of available inventory.  Despite the decrease in March, the index is 0.8% above a year ago and was the third best reading in the past year.

 

In the realm of mortgages, mortgage application volume increased slightly during the week ending April 21.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 2.7%.  The seasonally adjusted Purchase Index decreased 1.0% from the prior week, while the Refinance Index increased 7.0%.  Overall, the refinance portion of mortgage activity increased to 44.0% total applications from 42.4% from the prior week.  The adjustable-rate mortgage share of activity increased to 8.7% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.20% from 4.22%, its lowest level since November 2016, with points increasing to 0.37 from 0.35.

 

For the week, the FNMA 3.5% coupon bond dropped 7.8 basis points to close at $102.797 while the 10-year Treasury yield increased 4.29 basis points to end at 2.289%.  Stocks ended the week higher.  The Dow Jones Industrial Average rose 392.75 points to end at 20,940.51.  The NASDAQ Composite Index advanced 137.09 points to close at 6,047.61 and the S&P 500 Index added 35.51 points to close at 2,384.20.  Year to date, the Dow Jones Industrial Average has gained 5.96%, the NASDAQ Composite Index has advanced 12.34%, and the S&P 500 Index has risen 6.49%.

 

This past week, the national average 30-year mortgage rate rose to 4.09% from 4.05%; the 15-year mortgage rate increased to 3.34% from 3.29%; the 5/1 ARM mortgage rate increased to 3.08% from 3.04%; and the FHA 30-year rate increased to 3.80% from 3.75%.  Jumbo 30-year rates rose from 4.32% to 4.35%.

 

Economic Calendar – for the Week of May 1, 2017

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Date Time

ET

Event /Report /Statistic For Market Expects Prior
May 01 08:30 Personal Income Mar 0.3% 0.4%
May 01 08:30 Personal Spending Mar 0.1% 0.1%
May 01 08:30 PCE Prices Mar NA 0.1%
May 01 08:30 Core PCE Prices Mar 0.0% 0.2%
May 01 10:00 Construction Spending Mar 0.4% 0.8%
May 01 10:00 ISM Index Apr 56.5 57.2
May 03 07:00 MBA Mortgage Applications Index 04/29 NA +2.7%
May 03 08:15 ADP Employment Change Apr 170,000 263,000
May 03 10:00 ISM Services Index Apr 55.8 55.2
May 03 10:30 Crude Oil Inventories 04/29 NA -3.64mln
May 03 14:00 FOMC Rate Decision May 0.875 0.875
May 04 07:30 Challenger Job Cuts Apr NA -2.0%
May 04 08:30 Balance of Trade Mar -$44.4B -$43.6B
May 04 08:30 Initial Jobless Claims 04/29 246,000 257,000
May 04 08:30 Continuing Jobless Claims 04/22 NA 1,988K
May 04 08:30 Preliminary Productivity Qtr. 1 0.1% 1.3
May 04 08:30 Unit Labor Costs Qtr. 1 2.6% 1.7%
May 04 10:00 Factory Orders Mar 0.4% 1.0%
May 05 08:30 Nonfarm Payrolls Apr 180,000 98,000
May 05 08:30 Nonfarm Private Payrolls Apr 175,000 89,000
May 05 08:30 Unemployment Rate Apr 4.6% 4.5%
May 05 08:30 Average Hourly Earnings Apr 0.3% 0.2%
May 05 08:30 Average Workweek Apr 34.4 34.3
May 05 15:00 Consumer Credit Mar $16.0B $15.2B

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.80, -7.8 bp) traded within a narrower 47 basis point range between a weekly intraday high of $102.86 on Friday and a weekly intraday low of $102.39 on Wednesday before closing the week at $102.80.  Mortgage bonds initially traded down to test support at the 25-day moving average early in the week before bouncing higher for a test of nearest resistance at the 38.2% Fibonacci retracement level ($102.806).  This bounce higher in the later portion of the week resulted in a positive stochastic crossover buy signal.  If the bond manages to break above resistance during this coming week that features numerous potential market-moving economic reports, we could see higher prices and lower yields resulting in a slight improvement in rates.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

The stock market closed moderately lower in an Easter Holiday-shortened the week characterized by lower than usual trading volumes.  In fact, Monday’s trading saw fewer shares changing hands than on any day so far this year.  Economic news seemed to take a back seat to geopolitical events during the week, events that weighed on equity investor sentiment while producing a boost for bond prices and lowing yields and interest rates.

 

Stocks were pressured lower on Monday following unconfirmed reports China was positioning troops along its border with North Korea.  Although this troop movement may have been an outcome from President Trump’s recent meeting with Chinese President Xi Jinping to put pressure on North Korea to stop its nuclear weapons testing, concerns over intensifying tensions in the Korean peninsula continued to be negative for investor sentiment throughout the week.

 

Furthermore, the ongoing civil war in Syria and how it is impacting relations between the U.S. and Russia also kept investors on edge.  Thursday, news that the U.S. had dropped the “Mother of All Bombs,” otherwise known as the GBU-43/B Massive Ordnance Air Burst bomb – the most powerful non-nuclear bomb in the US arsenal, on an ISIS target in Afghanistan also appeared to ignite a sharp decline in stocks prices to end the week.  This first-ever use of the 21,000 lb. GBU-43/B bomb was also meant to send a clear signal to North Korea to cease its nuclear missile testing.

 

Wednesday afternoon, stocks moved lower and bond prices higher in response to President Trump’s remarks to an interviewer with The Wall Street Journal when he stated the U.S. dollar is “getting too strong” and he hoped the Federal Reserve would keep interest rates low.  Trump “talking down the dollar” helped push the yield on the 10-year Treasury note to new five-month lows the following Thursday morning.

 

In housing, Mortgage application volume increased slightly during the week ending April 7.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) rose 1.5%.  The seasonally adjusted Purchase Index increased 3.0% from the prior week, while the Refinance Index remained unchanged at 4.0%.  Overall, the refinance portion of mortgage activity decreased to 41.6% of total applications from 42.6% from the prior week, falling to its lowest level since September 2008.  The adjustable-rate mortgage share of activity remained unchanged at 8.5% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased to 4.28% from 4.34% with points increasing to 0.38 from 0.31.

 

For the week, the FNMA 3.5% coupon bond gained 56.2 basis points to close at $103.00 while the 10-year Treasury yield decreased 15.02 basis points to end at 2.232%.  Stocks ended the week lower.  The Dow Jones Industrial Average fell 202.85 points to end at 20,453.25.  The NASDAQ Composite Index dropped 72.66 points to close at 5,805.15 and the S&P 500 Index lost 26.59 points to close at 2,328.95.  Year to date, the Dow Jones Industrial Average has gained 3.49%, the NASDAQ Composite Index has advanced 7.84%, and the S&P 500 Index has risen 4.03%.

 

This past week, the national average 30-year mortgage rate fell to 4.04% from 4.17%; the 15-year mortgage rate decreased to 3.27% from 3.38%; the 5/1 ARM mortgage rate decreased to 3.07% from 3.13%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates fell from 4.39% to 4.31%.

 

Economic Calendar – for the Week of April 17, 2017

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Apr 17 08:30 New York Empire State Manufacturing Index Apr 13.0 16.4
Apr 17 10:00 NAHB Housing Market Index Apr 70 71
Apr 17 16:00 Net Long-Term TIC Flows Apr NA $6.3B
Apr 18 08:30 Housing Starts Mar 1260K 1288K
Apr 18 08:30 Building Permits Mar 1240K 1213K
Apr 18 09:15 Industrial Production Mar 0.4% 0.0%
Apr 18 09:15 Capacity Utilization Mar 76.2% 75.4%
Apr 19 07:00 MBA Mortgage Applications Index 04/15 NA +1.5%
Apr 19 10:30 Crude Oil Inventories 04/15 NA -2.17M
Apr 19 14:00 Fed’s Beige Book Apr NA NA
Apr 20 08:30 Initial Jobless Claims 04/15 241K 234K
Apr 20 08:30 Continuing Jobless Claims 04/8 NA 2028K
Apr 20 08:30 Philadelphia Fed Manufacturing Index Apr 21.8 32.8
Apr 20 10:00 Index of Leading Economic Indicators Mar 0.3% 0.6%
Apr 21 10:00 Existing Home Sales Mar 5.55M 5.48M

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($103.00, +56.2 bp) traded within a 73 basis point range between a weekly intraday low of $102.297 on Monday and a weekly intraday high of $103.031 on Friday before closing the week at $103.00.  Geopolitical events during the week “trumped” technical signals and economic news (no pun intended) to send stocks lower while triggering a “flight to safety” for investors into bonds.  Mortgage bonds broke above resistance at the 38.2% Fibonacci retracement level ($102.806) and this level now becomes nearest support.  Although substantially “overbought,” the bond will set its sights on the next resistance level at $103.13.  If stocks continue to slide lower this coming week, we could see bond prices improve with mortgage rates slipping slightly lower.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

The major stock market indexes continued to grind their way higher to establish new all-time highs for the third consecutive week.  Meanwhile, bond prices received a boost (yields fell) in response to a rally in bond prices in Europe and Japan along with a month-over-month decline in the University of Michigan’s Consumer Sentiment Index.

 

The remainder of the week’s economic data was largely focused on the housing sector and was generally regarded as promising.  Also, the labor market appears to be slowly strengthening.  Although weekly Initial Jobless Claims increased 4,000 more than expected to 244,000, the more significant four-week average of jobless claims fell to its lowest level since 1973, falling to 241,000.  Continuing jobless claims declined by 17,000.

 

In housing, the National Association of Realtors reported Existing Home Sales in January soared to their highest level in a decade, rising 3.3% to a seasonally adjusted annual rate of 5.69 million.  Economists had predicted a sales pace of 5.57 million.  Further, December’s initial reading of 5.49 million in sales was revised higher to 5.51 million.  Home inventory continued to decline for the 20th consecutive month to a 3.6 months’ worth of supply.  Median home prices increased 7.1% from a year earlier to $228,900.

 

New Home Sales were also in the news this past week as the Commerce Department reported sales at a seasonally adjusted annual rate of 555,000 in January which was slightly below the consensus forecast of 566,000.  Still, this was 3.7% higher than December’s rate of 535,000 and 5.5% higher compared to the year ago sales pace.  January’s median new home sales price fell 1% from December to $312,900, but is still 7% higher than a year ago.  New home inventory in January held steady at 5.7 months at the current sales pace matching December’s inventory level.

 

 

Mortgage application volume declined during the week ending February 17.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) declined by 2.0%.  The seasonally adjusted Purchase Index fell 3.0% from the prior week, while the Refinance Index dropped 1.0%.  Overall, the refinance portion of mortgage activity decreased to 46.2% of total applications from 46.9% from the prior week, the lowest activity since June 2009.  The adjustable-rate mortgage share of activity accounted for 7.3% of total applications, down from 7.5% the prior week.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased from 4.32% to 4.35% with points increasing to 0.35 from 0.34.

 

Elsewhere, the Federal Reserve released the minutes from its latest policy meeting on Wednesday, indicating the economy was improving to extent the Fed will soon look to begin hiking interest rates.  The latest probabilities for a 25 basis point rate hike at future Fed policy meetings are as follows:  March 15 – 26.6%; May 3 – 51.7%; June 14 – 69.6%.

 

For the week, the FNMA 3.5% coupon bond gained 51.5 basis points to close at $102.78 while the 10-year Treasury yield decreased 10.48 basis points to end at 2.3152%.  Stocks ended the week higher with the major indexes continuing to set new record all-time highs during the week.  The Dow Jones Industrial Average gained 197.71 points to end at 20,821.76.  The NASDAQ Composite Index rose 6.73 points to close at 5,845.3, and the S&P 500 Index advanced 16.18 points to close at 2,367.34.  Year to date, the Dow Jones Industrial Average has gained 5.36%, the NASDAQ Composite Index has advanced 8.59%, and the S&P 500 Index has gained 5.74%.

 

This past week, the national average 30-year mortgage rate fell to 4.12% from 4.18%; the 15-year mortgage rate declined to 3.33% from 3.38%; the 5/1 ARM mortgage rate rose to 3.01% from 3.00%; and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates fell from 4.30% to 4.25%.

 

Economic Calendar – for the Week of February 27, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Date
Time
ET
Event /Report /Statistic
For
Market Expects
Prior
Feb 27
08:30
Durable Goods Orders
Jan
1.8%
-0.4%
Feb 27
08:30
Durable Goods Orders – excluding transportation
Jan
0.5%
0.5%
Feb 27
10:00
Pending Home Sales
Jan
0.9%
1.6%
Feb 28
08:30
2nd Estimate GDP
Qtr. 4
2.1%
1.9%
Feb 28
08:30
2nd Estimate GDP Deflator
Qtr. 4
2.1%
2.1%
Feb 28
08:30
Advance International Trade in Goods
Jan
NA
-$65.0B
Feb 28
08:30
Advance Wholesale Inventories
Jan
NA
1.0%
Feb 28
09:45
Chicago Purchasing Managers Index (PMI)
Feb
53.0%
50.3%
Feb 28
10:00
Consumer Confidence Index
Feb
111.5
111.8
Mar 01
07:00
MBA Mortgage Applications Index
02/25
NA
-2.0%
Mar 01
08:30
Personal Income
Jan
0.4%
0.3%
Mar 01
08:30
Personal Spending
Jan
0.3%
0.5%
Mar 01
08:30
Core PCE Prices
Jan
0.2%
0.1%
Mar 01
10:00
Construction Spending
Jan
0.6%
-0.2%
Mar 01
10:00
ISM Index
Feb
56.1
56.0
Mar 01
10:30
Crude Oil Inventories
02/25
NA
+0.6M
Mar 01
14:00
Fed’s Beige Book
Mar
NA
NA
Mar 02
07:30
Challenger Job Cuts
Feb
NA
-38.8%
Mar 02
08:30
Initial Jobless Claims
02/25
244K
244K
Mar 02
08:30
Continuing Jobless Claims
02/18
NA
2060K
Mar 03
10:00
ISM Services
Feb
56.5%
56.5%

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.78, +51.5 bp) traded within a wider 86 basis point range between a weekly intraday high of $102.83 on Friday and a weekly intraday low of $101.97 on Tuesday before closing the week at $102.78.  The chart shows a nice continuation higher from last week’s buy signal carrying prices up to overhead technical resistance found at the 61.8% Fibonacci retracement level at $102.79.  Support is found at the 25-day moving average at $102.17.

 

The slow stochastic oscillator is not yet “overbought” suggesting bond prices have further room to run higher.  Another factor making the case for higher bond prices in the short-term are stock valuations becoming ever more “pricey” while the major stock market indexes become extremely “overbought.”  There currently are several key momentum indicators “rolling over” flashing sell signals suggesting a market consolidation or correction could soon be on the way.  However, the stock market could remain irrational and “overbought” for a longer period of time than we can imagine.  If this technical analysis prediction for a pull-back in stock prices does come to fruition this coming week, we should see a continuing move higher in mortgage bond prices with a slight improvement in mortgage rates.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

The major stock market indexes began the week trading relatively flat until rallying on Thursday and Friday to set new record all-time highs following a discussion between President Trump and aviation executives where Trump promised “something phenomenal in terms of tax reform” in the next few weeks.  The prospects for higher future corporate profits as a result of tax reform improved investor sentiment.  Another factor contributing to the rally were signals from the Trump Administration that they were willing to cooperate with congressional Republicans on a plan to reduce entitlement spending as long as current beneficiaries would not be negatively impacted.

 

The economic calendar was light with little in the way of data to have much influence on the bond market, but despite this, bond prices rose modestly while the yields decreased for intermediate and long-term Treasuries.  Friday, investors largely ignored an unexpected decline in the University of Michigan’s Consumer Sentiment Index for February.  The Index fell to 95.7 from January’s reading of 98.5 which was a decade high reading.  Economists had expected a reading of 97.9.  Still, there have only been five higher readings in the past 10 years.

 

Mortgage application volume rose modestly during the week ending February 3.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) advanced by 2.3%.  The seasonally adjusted Purchase Index rose 2.0% from the prior week, while the Refinance Index also increased 2.0%.  Overall, the refinance portion of mortgage activity decreased to 47.9% of total applications from 49.4% from the prior week, the lowest activity since June 2009.  The adjustable-rate mortgage share of activity accounted for 6.9% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased from 4.39% to 4.35% with points unchanged at 0.34.

 

For the week, the FNMA 3.5% coupon bond advanced 15.8 basis points to close at $102.33 while the 10-year Treasury yield decreased 5.75 basis points to end at 2.4091%.  Stocks ended the week higher with the major indexes setting new record all-time highs.  The Dow Jones Industrial Average gained 197.91 points to end at 20,269.37.  The NASDAQ Composite Index rose 67.36 points to close at 5,734.13, and the S&P 500 Index advanced 18.68 points to close at 2,316.10.  Year to date, and exclusive of any dividends, the Dow Jones Industrial Average has gained 2.50%, the NASDAQ Composite Index has advanced 6.12%, and the S&P 500 Index has gained 3.34%.

 

This past week, the national average 30-year mortgage rate fell to 4.19% from 4.24%; the 15-year mortgage rate declined to 3.39% from 3.44%; the 5/1 ARM mortgage rate fell to 3.04% from 3.05%; and the FHA 30-year rate dropped to 3.75% from 3.80%.  Jumbo 30-year rates decreased from 4.36% to 4.30%.

 

Economic Calendar – for the Week of February 13, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Feb 14 08:30 Producer Price Index (PPI) Jan 0.3% 0.3%
Feb 14 08:30 Core PPI Jan 0.2% 0.2%
Feb 15 07:00 MBA Mortgage Applications Index 02/11 NA 2.3%
Feb 15 08:30 Consumer Price Index (CPI) Jan 0.3% 0.3%
Feb 15 08:30 Core CPI Jan 0.2% 0.2%
Feb 15 08:30 New York Empire State Manufacturing Index Feb 7.0 6.5
Feb 15 08:30 Retail Sales Jan 0.1% 0.6%
Feb 15 08:30 Retail Sales excluding automobiles Jan 0.4% 0.2%
Feb 15 09:15 Capacity Utilization Jan 75.5% 75.5%
Feb 15 09:15 Industrial Production Jan 0.0% 0.8%
Feb 15 10:00 Business Inventories Dec 0.4% 0.7%
Feb 15 10:00 NAHB Housing Market Index Feb 68 67
Feb 15 10:30 Crude Oil Inventories 02/11 NA +13.8M
Feb 15 16:00 Net Long-Term TIC Flows Feb NA $30.8B
Feb 16 08:30 Housing Starts Jan 1,220K 1,226K
Feb 16 08:30 Building Permits Jan 1,230K 1,210K
Feb 16 08:30 Initial Jobless Claims 02/11 245,000 234,000
Feb 16 08:30 Continuing Jobless Claims 02/11 NA 2,078K
Feb 16 08:30 Philadelphia Fed Manufacturing Index Feb 17.5 23.6
Feb 17 10:00 Index of Leading Economic Indicators Jan 0.5% 0.5%

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.33, +15.8 bp) traded within a 77 basis point range between a weekly intraday high of $102.91 on Wednesday and a weekly intraday low of $102.14 on Friday before closing the week at $102.33.  The chart shows the bond moved higher Monday through Wednesday, breaking above resistance from the 50-day and 25-day moving averages.  On Wednesday, the bond closed above additional resistance at the 61.8% Fibonacci retracement level before being turned away on Thursday.  Thursday’s negative, red candlestick actually appears worse than it is as it reflects a monthly coupon bond repricing of -22 basis points after the close of trading.  The bond bounced back modestly on Friday, rising from the 50-day moving average to close on the 25-day moving average which also serves as closest resistance.

 

There is a negative stochastic crossover sell signal showing, but this is largely a result of the monthly coupon repricing and can therefore be discounted.  Overall, the chart indicates price direction is unclear, suggesting traders will likely take a wait-and-see approach until more robust economic data arrives this coming week.  Depending on economic and political news, bond prices could head in either direction, but will certainly break out of the current narrow range between technical support and resistance.  A break above resistance could lead to a slight improvement in mortgage rates while a drop below support could result in slightly worse rates.

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Weekly Review

 

The major stock market indexes finished the week “mixed” with little overall change as did bond prices.  The rather flat, lackluster performance in the financial markets may have been reflective of trader’s attention on the current political environment in Washington rather than on economic news and fourth-quarter corporate earnings reports.  For example, there were a number of earnings reports during the week easily exceeding analyst expectations that were unable to trigger significant stock gains.  A notable exception took place on Wednesday when Apple’s earnings surprise sparked a 6% rally in the shares.

 

The economic calendar was robust but generated little market reaction as stock indexes remained close to record levels.  The Federal Reserve’s Federal Open Market Committee (FOMC) maintained its current monetary policy on Wednesday while providing no solid clues when the next rate hike could be announced.   However, FOMC voting member Chicago Fed President Charles Evans stated a “slow pace of hikes is needed to help the U.S. economy weather downside shocks” while San Francisco Fed President Williams (non-FOMC voter) came out on Friday saying three rate hikes is a “reasonable guess” for the Fed in 2017 and a “March rate hike is on the table.”  Based on the latest CME Group 30-Day Fed Fund futures prices, the current probability for a March 15 rate hike of 25 basis points is only 13.3%.  The probability for a May 3 rate hike is 35.5% and the probability for a June 14 rate hike is currently 68.2%.

 

The most significant economic report for the week was Friday’s Employment Situation Summary for January showing greater than forecast job growth of 227,000 versus a consensus of 170,000.  However, the potentially inflationary Average Hourly Earnings only increased 0.1% compared to a consensus forecast of 0.3% while December’s reading was downwardly revised to 0.2% from an initially reported 0.4%.  This combination of substantial job growth and tepid wage growth should temper Fed officials from rushing toward their next rate hike.

 

In housing, the National Association of Realtors (NAR) reported Pending Home Sales in December increased 1.6% from November versus a consensus estimate of 1.3%.  The NAR stated “enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract.  The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs.  Sales will struggle to build on last year’s strong pace if inventory conditions don’t improve.”

As for mortgages, mortgage application data for the week ending January 27 was released by the Mortgage Bankers Association (MBA) showing their overall seasonally adjusted Market Composite Index (application volume) fell by 3.2%.  The seasonally adjusted Purchase Index fell 6.0% from the prior week, while the Refinance Index declined 1.0%.  Overall, the refinance portion of mortgage activity decreased to 49.4% of total applications from 50.0% from the prior week.  The adjustable-rate mortgage share of activity accounted for 6.4% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased from 4.35% to 4.39% with points increasing to 0.34 from 0.30.

 

For the week, the FNMA 3.5% coupon bond advanced 14.1 basis points to close at $102.17 while the 10-year Treasury yield decreased 1.96 basis points to end at 2.4666%.  Stocks ended the week “mixed” with the Dow Jones Industrial Average dropping 22.32 points to end at 20,071.46.  The NASDAQ Composite Index rose 5.99 points to close at 5,666.77, and the S&P 500 Index advanced 2.73 points to close at 2,297.42.  Year to date, and exclusive of any dividends, the Dow Jones Industrial Average has gained 1.54%, the NASDAQ Composite Index has advanced 5.01%, and the S&P 500 Index has gained 2.55%.

 

This past week, the national average 30-year mortgage rate was unchanged at 4.24%; the 15-year mortgage rate was unchanged at 3.44%; the 5/1 ARM mortgage rate remained unchanged at 3.05%; and the FHA 30-year rate remained unchanged at 3.80%.  Jumbo 30-year rates increased to 4.36% from 4.35%.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.17, +14.1 bp) traded within a 70 basis point range between a weekly intraday high of $102.45 on Friday and a weekly intraday low of $101.75 on Wednesday before closing the week at $102.17.  The chart shows the bond traded around the 76.4% Fibonacci retracement level ($102.071) during the past week and is poised to make a bounce higher off of this level on a technical basis.  There was a bullish moving average crossover buy signal as the 25-day moving average crossed above the 50-day moving average.  There was also a positive stochastic crossover buy signal from an oversold condition in the slow stochastic oscillator suggesting higher prices.  Should this scenario play out this coming week, we should see a rise in bond prices (lower yields) leading to slightly lower mortgage rates.

 

Economic Calendar – for the Week of February 6, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Feb 07 08:30 Balance of Trade Dec -$45.0B -$45.2B
Feb 07 10:00 JOLTS Job Openings Report   NA 5.522M
Feb 07 15:00 Consumer Credit Dec $19.4B $24.5B
Feb 08 07:00 MBA Mortgage Applications Index 02/04 NA -3.2%
Feb 08 10:30 Crude Oil Inventories 02/04 NA +6.500M
Feb 09 08:30 Initial Jobless Claims 02/04 250K 246K
Feb 09 08:30 Continuing Jobless Claims 02/04 NA 2064K
Feb 09 10:00 Wholesale Inventories Dec 1.0% 1.0%
Feb 10 08:30 Export Prices excluding agriculture Jan NA 0.4%
Feb 10 08:30 Import Prices excluding oil Jan NA -0.2%
Feb 10 10:00 Prelim. Univ. of Michigan Consumer Sentiment Index Feb 97.9 98.5
Feb 10 14:00 Treasury Budget Jan NA $55.2B

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

The major stock market indexes began the New Year’s holiday-shortened week in an optimistic fashion with the Dow Jones Industrial Average coming within a fraction of a point at 19,999.63 of the elusive 20,000 landmark on an intraday basis Friday before pulling back.  Meanwhile, the bond market managed to record minor gains in the face of the stock market’s advance.  The minutes from the Federal Reserve’s latest Federal Open Market Committee meeting helped to lift prices of intermediate and long-term Treasuries to send their yields lower during the week.  The minutes revealed Fed officials continue to stress the pace of future interest rate hikes would be “gradual,” and investors took this as a “dovish” sign.

 

Stock investors were encouraged by a combination of good economic news and future prospects of improving quarterly corporate earnings reports.  Better than forecast readings in manufacturing activity in Great Britain, China, and the U.S. on Tuesday set a positive tone for the stock market for the week.  The Institute of Supply Management’s Purchasing Managers’ Index (PMI) for December showed a healthy expansion in manufacturing activity with a reading of 54.7 compared to a forecast of 52.8 with the New Orders Index advancing by its largest margin in seven years.

 

Expectations for improved corporate earnings are also sustaining the stock market with data and analytics firm FactSet reporting earnings for corporations in the S&P 500 Index as a whole will increase about 3% year-over-year for the fourth quarter of 2016 while other analysts polled by the Wall Street Journal expect earnings to increase by 11% for the first quarter of 2017.

 

The week’s most significant economic news arrived on Friday with the release of the December Employment Situation Summary from the Department of Labor’s Bureau of Labor Statistics.  This report showed a headline jobs gain of 156,000 that missed the consensus forecast of 178,000, but November’s initially reported 178,000 jobs were upwardly revised to 204,000.  However, it was a larger than expected 0.4% month-over-month jump and 2.9% year-over-year increase in Hourly Earnings that triggered a year-on-year sharp sell-off in bonds on Friday.  The increase was the fastest pace of the recovery to date suggesting the Fed may have to hike interest rates quicker than anticipated to keep personal consumption expenditure (PCE) inflation close to its 2% target.

 

In housing, mortgage application data for the prior two weeks was released by the Mortgage Bankers Association (MBA) showing their overall seasonally adjusted Market Composite Index declined by 12.0%.  The seasonally adjusted Purchase Index decreased 2.0% from the prior week, while the Refinance Index plunged 22.0% for a 13.0% decline on a year-over-year basis.  Overall, the refinance portion of mortgage activity increased to 52.2% of total applications from 51.8%.  The adjustable-rate mortgage share of activity accounted for 5.4% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance decreased from 4.45% to 4.39% with points increasing to 0.43 from 0.39.

 

For the week, the FNMA 3.5% coupon bond gained 7.8 basis points to end at $102.52 while the 10-year Treasury yield fell 1.10 basis points to end at 2.421%.  Stocks ended the week higher with the Dow Jones Industrial Average gaining 201.20 points to end at 19,963.80.  The NASDAQ Composite Index added 137.94 points to close at 5,521.06, and the S&P 500 Index advanced 38.15 points to close at 2,276.98.  Year to date, and exclusive of any dividends, the Dow Jones Industrial Average has gained 1.01%, the NASDAQ Composite Index has added 2.50%, and the S&P 500 Index has advanced 1.68%.

 

This past week, the national average 30-year mortgage rate decreased to 4.15% from 4.21% while the 15-year mortgage rate decreased to 3.35% from 3.40%.  The 5/1 ARM mortgage rate fell to 3.02% from 3.05%.  FHA 30-year rates were unchanged at 3.75% and Jumbo 30-year rates decreased to 4.20% from 4.23%.

 

Economic Calendar – for the Week of January 9, 2016

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Jan 09 15:00 Consumer Credit Nov $18.0B $16.0B
Jan 10 10:00 JOLTS – Job Openings Nov NA 5.534M
Jan 10 10:00 Wholesale Inventories Nov 0.9% -0.4%
Jan 11 07:00 MBA Mortgage Applications Index 01/06 NA 0.1%
Jan 11 10:30 Crude Oil Inventories 01/06 NA -7.100M
Jan 12 08:30 Export Prices excluding agriculture Dec NA 0.2%
Jan 12 08:30 Import Prices excluding oil Dec NA -0.1%
Jan 12 08:30 Initial Jobless Claims 01/07 255,000 235,000
Jan 12 08:30 Continuing Jobless Claims 12/31 NA 2,112K
Jan 12 14:00 Treasury Budget Dec NA -$14.4B
Jan 13 08:30 Producer Price Index (PPI) Dec 0.3% 0.4%
Jan 13 08:30 Core PPI Dec 0.1% 0.4%
Jan 13 08:30 Retail Sales Dec 0.7% 0.1%
Jan 13 08:30 Retail Sales excluding automobiles Dec 0.6% 0.2%
Jan 13 10:00 Business Inventories Nov 0.6% -0.2%
Jan 13 10:00 Univ. of Michigan Consumer Sentiment Index Jan 98.5 98.2

 

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

 

Bond prices shot higher to break above resistance at the 61.8% Fibonacci retracement level at $102.79 on Thursday only to fall back below this level on Friday.  The FNMA 30-year 3.5% coupon bond ($102.52, +7.8 basis points) traded within a narrower 89 basis point range between a weekly intraday low of $102.03 on Tuesday and a weekly intraday high of $102.92 on Friday before closing the week at $102.52.  The chart is showing a Dark Cloud Cover candlestick pattern resulting from Friday’s price pull-back.  This is a reversal pattern suggesting prices will fall back toward support located at the 25-day moving average at $102.05 and the 76.4% Fibonacci retracement level at $102.07.  Should this expected price action take place, we could see a slight worsening in mortgage rates in the coming week.

 

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Jan 3, 2017

Weekly Review

 

The major stock market indexes posted moderate losses for the week and the psychological milestone of 20,000 for the Dow Jones Industrial Average remained elusive.  The indexes recorded the majority of their losses on Wednesday with the S&P 500 Index charting its largest drop since last October.  The selling in stocks was likely due to large institutional investors such as pension funds rebalancing their portfolios and locking in equity gains realized since the election.

 

Meanwhile, bond prices rose and yields fell following a surprisingly strong and robust $34 billion 5-year Treasury note auction that saw a high yield of 2.057% with a strong bid-to-cover ratio 2.72.  Indirect bidders (primarily foreign central banks) snapped up 71.4% of this supply while direct bidders (bond dealers, hedge funds, pension funds, mutual funds, insurers, banks, and individuals) bought 4.1% of the issue.  Bond prices also improved on news of an unexpected decline in Pending Home Sales.

 

Wednesday, the National Association of Realtors reported their Pending Home Sales Index fell to a 10-month low during November, falling 2.5% to 107.3.  Analysts had forecast the Index to increase 0.5% for the month.  The Index was also 0.4% lower than in November 2015.  This might be a sign that rising mortgage rates coupled with a shortage of home inventory available for sale could be weighing on the housing market.

 

However, home prices continue to remain strong.  According to the latest report from S&P CoreLogic Case-Shiller, home prices reached a new high, rising 5.6% in October.  The S&P/Case-Shiller U.S. National Home Price Index was also 5.6% higher in October from the prior year.  The Case-Shiller 20-City Composite Home Price Index increased 5.1% in October from the same time a year ago.

 

For the week, the FNMA 3.5% coupon bond gained 89.1 basis points to end at $102.42 while the 10-year Treasury yield fell 9.66 basis points to end at 2.446%.  Stocks ended the week lower with the Dow Jones Industrial Average falling 171.21 points to end at 19,762.60.  The NASDAQ Composite Index dropped 79.57 points to close at 5,383.12, and the S&P 500 Index lost 24.96 points to close at 2,238.83.

 

Year to date, and exclusive of any dividends, the Dow Jones Industrial Average (DJIA) has gained 11.83%, the NASDAQ Composite Index has added 6.98%, and the S&P 500 Index has advanced 8.70%.  When including dividends, the DJIA gained 13.4%, the NASDAQ Composite gained 7.5% and the S&P 500 gained 9.5% for the year.

 

This past week, the national average 30-year mortgage rate decreased to 4.21% from 4.33% while the 15-year mortgage rate decreased to 3.40% from 3.51%.  The 5/1 ARM mortgage rate fell to 3.05% from 3.15%.  FHA 30-year rates decreased to 3.75% from 3.85% and Jumbo 30-year rates decreased to 4.23% from 4.35%.

 

Economic Calendar – for the Week of December 26, 2016

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Date Time

ET

Event /Report /Statistic For Market Expects Prior
Jan 03 10:00 Construction Spending Nov 0.5% 0.5%
Jan 03 10:00 ISM Index Dec 53.6 53.2
Jan 04 07:00 MBA Mortgage Applications Index 12/31 NA 2.5%
Jan 04 14:00 FOMC Minutes Dec NA NA
Jan 05 07:30 Challenger Job Cuts Dec NA -13.0%
Jan 05 08:15 ADP Employment Change Dec 170,000 216,000
Jan 05 08:30 Initial Jobless Claims 12/31 265,000 265,000
Jan 05 08:30 Continuing Jobless Claims 12/24 NA 2,102K
Jan 05 10:00 ISM Services Index Dec 56.6 57.2
Jan 05 11:00 Crude Oil Inventories 12/30 NA 0.600M
Jan 06 08:30 Nonfarm Payrolls Dec 175,000 178,000
Jan 06 08:30 Nonfarm Private Payrolls Dec 170,000 156,000
Jan 06 08:30 Unemployment Rate Dec 4.7% 4.6%
Jan 06 08:30 Hourly Earnings Dec 0.3% -0.1%
Jan 06 08:30 Average Workweek Dec 34.4 34.4
Jan 06 08:30 Trade Balance Nov -$42.2B -$42.6B
Jan 06 10:00 Factory Orders Nov -2.1% 2.7%

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

Bond prices shot higher and broke above two levels of resistance during the week.  The FNMA 30-year 3.5% coupon bond ($102.42, +89.1 basis points) traded within a wider 120 basis point range between a weekly intraday low of $101.30 on Tuesday and a weekly intraday high of $102.50 on Friday before closing the week at $102.42.  Trading volumes will get back toward normal levels during this coming week, and coupled with major economic news headlined by December’s Employment Situation Summary, we could see an increase in market volatility.  The chart is showing the bond is not yet “overbought” while in a favorable upward trend, so we could see a continuation higher toward the next resistance level at the 61.8% Fibonacci retracement level at $102.79.  As a result, we should see slightly lower mortgage rates in the coming week.

 

 

 

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter