September 2009

Mortgage Bonds have opened a little lower this morning, even after a slightly worse than expected Initial Jobless Claims report. 

Since August 7th, Mortgage Bonds have gained 281bp…so ahead of today’s Treasury Auction annoucement and tomorrow’s Jobs Report, it’s not unusual to see a little profit taking as Traders exercise a bit of caution.   

At 11:00am ET, the Treasury will announce the size of next week’s auction of 3 and 10-year Notes and 30-year Bonds.  This will be an important auction, as the longer term maturities compete against Mortgage Bonds for investor dollars.  Therefore, the announcement at 11:00am ET on the size of next week’s supply could shake things up.  Some of the previous Treasury announcements have caused significant

Mortgage Bonds are trading modestly higher and nicely above former resistance at the 100 and 200-day Moving Averages.  

The latest move higher has been helped by the pullback in Stocks.  As you might recall in Monday's Update, we talked about the Stock market being set up for a correction and Mortgage Bonds being the beneficiary, which could help them power through resistance.  Since that time, the Dow has lost about 250 points, while Mortgage Bonds have gained 60bp and broken above resistance.

On the news front was a worse than expected ADP Employment report, which showed 298,000 jobs lost, a bit worse than estimates of 250,000 jobs lost.  This report comes ahead of Friday's closely watched and potentially market moving, official Jobs

Mortgage Bonds are trading lower – but improved from their worst levels – on the heels of better than anticipated housing and manufacturing news. 

Pending Home Sales for July increased by 3.2%, more than double the expectations of 1.5%, and representing the sixth consecutive monthly gain…the longest streak on record.  While it’s nice to finally hear some positive news about the housing sector – let’s remain cautious in our optimism, as many first time homebuyers moved up their home purchasing plans to take advantage of the tax credit.  This temporary stimulus may mean a corresponding dip in Home Sales data once the credit expires.  That said – combined with still historically low rates, this report is a great talking point to help more of those first

Mortgage Bonds are starting the week slightly higher, but prices are again battling tough overhead resistance at the 100 and 200-day Moving Averages, as well as the Falling Trendline.  A look at the chart shows how this ceiling has stopped prices from advancing much higher over the past twelve trading days.

The manufacturing sector measuring Chicago Purchasing Managers Index (PMI) came in right at 50, quite a bit better than last month’s read of 43.4.  And interestingly enough, a reading above 50 indicates expansion, while a reading below 50 indicates contraction.  This is a fairly positive sign for the beleaguered manufacturing sector, and sets up the more closely watched national manufacturing number due tomorrow, via the Institute of Supply Managers