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Mortgage News Daily combines the expertise of some of the housing industry's leading minds with the power of social media to offer an always lively, constantly evolving web community. MND communicates breaking news, streams video, and provides expert opinion and commentary to a community of interested market professionals and curious consumers.Looking At Longer Term Charts For Perspective
When faced with a lock float decision with decent arguments for either course of action, I like to look at longer term charts to get a sense of where I'm at vs. where I was or could be. Doing so at the current time leaves me with a pretty simple conclusion. Without trying to predict the future, we're obviously much higher in the 2010 range than we are low--pretty close to the highs in fact.
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It is frustrating, however, that a lot of the lower prices occurred in early January where we might have to doubt whether they were truly reflective of the range or were, in some way, remnants of year end distortion. Even so, the lows from late Feb make a similar case, but there too, we could impugn those on the grounds that they happened and were reversed abruptly. The bottom line I suppose, would be that 101-13 as a closing level for 4.5's feels highly improbable without a fundamental shift occurring in sentiment.
You're totally allowed to believe a fundamental shift is coming, but you'd also be deviating from the reliable tenet of "play the range until it plays you." In other words, you'd be betting on that which has been mostly true for a long time, to be untrue over the next few days and weeks. It can happen, but at least we can agree it has been less likely to happen than for ranges to hold up. Additional layers of support can be inferred from the recently quirky spread behavior in MBS combined with impending fed exit. In other words, there aren't any meaningful reasons on the horizon to assume MBS will outperform the rest of the bond market--quite the opposite in fact, albeit to an unknown extent.
There's support for the same range-playing ideologies in a longer term treasury chart, in which we see yields have moved almost exactly to the bottom of their recent trend of higher lows.
[Image or graph removed from email. View full article with images]
It's conceivable that things could go sideways-ish, or even worsen
slightly only to firmly break through that range with a massive rally on
some tape-bomb or unexpectedly buoyant auction results next week, but
the farther ahead on the calendar we look, the less it makes sense to
make today's lock decision on tomorrow's data. It's always going to be
an "awww shucks!" moment if you lock just before the market rallies, but
if rates were worse when you first had the ability to lock the deal in
question, then locking is akin to "taking profits" in the same way a
trader might, even if tomorrow's movements would have made him/her even
more money. Profits are profits.
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This email was sent to you by:
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Anonymous Anonymous |
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Message:
YOUR MESSAGE HERE
Looking At Longer Term Charts For Perspective
When faced with a lock float decision with decent arguments for either course of action, I like to look at longer term charts to get a sense of where I'm at vs. where I was or could be. Doing so at the current time leaves me with a pretty simple conclusion. Without trying to predict the future, we're obviously much higher in the 2010 range than we are low--pretty close to the highs in fact.
It is frustrating, however, that a lot of the lower prices occurred in early January where we might have to doubt whether they were truly reflective of the range or were, in some way, remnants of year end distortion. Even so, the lows from late Feb make a similar case, but there too, we could impugn those on the grounds that they happened and were reversed abruptly. The bottom line I suppose, would be that 101-13 as a closing level for 4.5's feels highly improbable without a fundamental shift occurring in sentiment.
You're totally allowed to believe a fundamental shift is coming, but you'd also be deviating from the reliable tenet of "play the range until it plays you." In other words, you'd be betting on that which has been mostly true for a long time, to be untrue over the next few days and weeks. It can happen, but at least we can agree it has been less likely to happen than for ranges to hold up. Additional layers of support can be inferred from the recently quirky spread behavior in MBS combined with impending fed exit. In other words, there aren't any meaningful reasons on the horizon to assume MBS will outperform the rest of the bond market--quite the opposite in fact, albeit to an unknown extent.
There's support for the same range-playing ideologies in a longer term treasury chart, in which we see yields have moved almost exactly to the bottom of their recent trend of higher lows.
It's conceivable that things could go sideways-ish, or even worsen
slightly only to firmly break through that range with a massive rally on
some tape-bomb or unexpectedly buoyant auction results next week, but
the farther ahead on the calendar we look, the less it makes sense to
make today's lock decision on tomorrow's data. It's always going to be
an "awww shucks!" moment if you lock just before the market rallies, but
if rates were worse when you first had the ability to lock the deal in
question, then locking is akin to "taking profits" in the same way a
trader might, even if tomorrow's movements would have made him/her even
more money. Profits are profits.
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