Monday, February 3, 2014 - Article by: Joe Shamie - First Choice Loan Services -
Monday - February 3, 2014, 10:45am ET
Current Trend Direction:Higher
Float/Lock Bias: Floating
Current Price of FNMA 4.0% Bond: $104.97, +16bp
After a stellar January, thanks to a terrible month in stocks, mortgage bonds begin the new month near unchanged.
The rest of the week's calendar is on the lighter side, but the government will report the January jobs report on Friday, which as we know will have a big impact on trading when it is delivered on Friday morning at 8:30 ET.
In January, the Dow and the S&P 500 suffered their worst monthly percentage declines since May of 2012, due in part to tapering of the Fed's massive stimulus program. Additionally, investors looked to book some profits after the major indexes hit record levels at the end of 2013.
Today begins the official reign of Janet Yellen as the chief of the U.S. Federal Reserve and becomes the first woman in its 100-year history to head the central bank. Ms. Yellen is considered a dove as far as monetary policy is concerned. She has been dealt a tough hand as the Fed now has a $4T balance sheet as it tries to exit QE3.
Technically, the 4% coupon broke above the 200-day moving average last week. As we mentioned in Friday's Closing Technical Signal, "The next stop looks to be the price peaks seen last October. Start hitting your database and gather all the folks who missed the boat back in October, you may just be presented with an opportunity to lock them in at the same pricing very soon. Next Friday's Jobs Report may be the stimulus to push Bonds higher to another level."
We are still carefully floating, as stocks continue to show overall weakness - but stay tuned.
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