Tuesday, June 10, 2014 - Article by: Joe Shamie - First Choice Loan Services -
Tuesday - June 10, 2014, 10:05 am ET
Current Trend Direction: Sideways
Float/Lock Bias: Carefully Floating
Current Price of FNMA 3.5% Bond: $102.16, -18bp
Mortgage Bonds continue in their sideways pattern today in the absence of any major economic data or geo-political headlines to impact trading. Today's action could be capped by the $28B 3-Year T Note auction, part of a total of $62B this week - results at 1:00pm ET.
Fannie Mae announced its May 2014 National Housing Survey yesterday revealing that housing has peaked and 2014 will see a slowdown from the amount of activity in 2013. The survey went on to say that tepid household income and concerns surrounding the U.S. economy are weighing on the housing sector. In addition, 57% of 1000 respondents said that the economy is headed in the wrong direction.
In the foreclosure arena, RealtyTrac reported that there was a 5% increase all types of foreclosures from April to May with a heavy concentration in the Northeast and the West Coast. However, there has been a 26% decrease from May 2013. Foreclosure activity recorded includes all default notices, scheduled auction and bank repossessions.
After closing at yet another record high yesterday, the S&P 500 (1,951) is trading lower this morning. At such lofty levels, investors would be smart to take some profits off the table in the short term, but the Fed continues to support Stocks through QE.
While the total number of working Americans now finally exceeds the number that were working before the recession began, the quality of the new jobs is not great. While food service, social assistance and home healthcare have seen the largest increases in employment, 3.1 million jobs collectively, high paying sectors like manufacturing, construction and government are collectively employing 3.6 million fewer persons than before the start of the Great Recession.
Technically, the 3.5% coupon is trapped beneath resistance at the 25-day Moving Average and with the weight of this week's Treasury auctions and little economic data, the sideways pattern could continue. We will recommend carefully floating as the Bond searches for some stabilization.
Joe Shamie NMLS # 241432
First Choice Loan Services NMLS # 210764
First Choice Bank NMLS# 177877
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