Well, there are times when I hate when I am right and last week ended up being one of them. I hope you all took my advice and locked your clients as the week went forward.
Depending on which FNMA bond you tracked, the 5.5% or the 6.0%, determined the level of destruction you saw, with the 5.5% losing more than 100bp in the two days. Either way, the "good news" is they both closed above their 25-day Moving Average, a good support layer.
Bonds will continue to be attacked this week, starting with tomorrow’s FOMC Meeting and the release of the Fed rate decision. Mortgage rates tend to move in the opposite direction as the Fed’s decision, so the question will be, will the movement last week be an expected correction, or will the trend be broken?
Here are the economic happenings this week:
- Tuesday: FOMC Meeting (2:15)
- Wednesday: Balance of Trade (08:30)
- Thursday: Initial Jobless Claims (8:30), Producer Price Index (PPI) {and Core PPI} (8:30), Retail Sales and Retail Sales ex-Auto (8:30)
- Friday: Consumer Price Index (CPI) {and Core CPI} (8:30), Capacity Utilization (9:15), Industrial Production (9:15)
As you can see, the "main event" will be tomorrow’s Fed rate decision, but the end of the week will be testing bonds again. I plan to keep locking clients this week, unless something interesting arises.
Mortgage Industry Professionals. Like what you see?
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{ 2 comments… read them below or add one }
Just an update - after I posted, bonds broke below their 25-day MA, so the trend may very well be broken.
Robert, you see your advice was heeded. Great job keeping us informed!
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