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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.All Signs Point to Higher Rates in Week Ahead
NFP has come and gone, let's see where things stand....
The October delivery FNCL 4.0 is -0-09 at 102-15. In the chart below I
called attention to a few technical inflection points. The ascending
trend channel that helped mortgage rates hit new lows on Wednesday has
broken down and FNCL 4.0s have made their way back into the range
that moderated price action for the majority of August. The falling
knife found support and bounced higher directly in the middle of that
range.
[Image or graph removed from email. View full article with images]
10s flagged
lower for the entire month of August (all summer really) and are now
flagging higher. The 2.625% coupon bearing 10 year TSY note is off its
session price lows (98-24) at 99-07 yielding 2.715% (+8.8bps). 10s are the worst spot on the curve followed by 7s (+8.6bps) and the long bond (+7.6bps). Volume was heavy into
the sell off but the longs have not totally lost their grip yet,
although it's weakening on a daily basis. The 2s/10s curve is 7bps
steeper at 219bps. Swaps spreads are tighter as vol deflates.
If the pain trade persists, I see 10s testing 2.85%....which is highly likely given the extremely slow econ calendar in the week ahead and pending Treasury issuance in the long end of the curve. Overseas buyers must show up to those auctions or weakness will intensify....
[Image or graph removed from email. View full article with images]
Short covering and new position adding combined to lead S&Ps up to 1,100
after NFP, a key psychological pivot point. In the chart below you can
see why I keep saying stocks were stagnant all summer, the S&P has
traded back and forth between 1040 and 1120 since May. Boring! With the econ calendar essentially empty and fund managers chasing alpha
(returns), I expect flows to favor buyers in the short term and the
S&P to test 1120 again (1107 and 1115 will be firm resistance on the way up). If that level is broken, equity traders
will be hesitant to add more long positions until 1130 is surpassed.
S&P futures are currently +10 at 1099.50
[Image or graph removed from email. View full article with images]
Plain and Simple: All signs point toward higher rates in the week ahead.
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This email was sent to you by:
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Mortgage News Daily
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Anonymous Anonymous |
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Message:
YOUR MESSAGE HERE
All Signs Point to Higher Rates in Week Ahead
NFP has come and gone, let's see where things stand....
The October delivery FNCL 4.0 is -0-09 at 102-15. In the chart below I
called attention to a few technical inflection points. The ascending
trend channel that helped mortgage rates hit new lows on Wednesday has
broken down and FNCL 4.0s have made their way back into the range
that moderated price action for the majority of August. The falling
knife found support and bounced higher directly in the middle of that
range.
10s flagged
lower for the entire month of August (all summer really) and are now
flagging higher. The 2.625% coupon bearing 10 year TSY note is off its
session price lows (98-24) at 99-07 yielding 2.715% (+8.8bps). 10s are the worst spot on the curve followed by 7s (+8.6bps) and the long bond (+7.6bps). Volume was heavy into
the sell off but the longs have not totally lost their grip yet,
although it's weakening on a daily basis. The 2s/10s curve is 7bps
steeper at 219bps. Swaps spreads are tighter as vol deflates.
If the pain trade persists, I see 10s testing 2.85%....which is highly likely given the extremely slow econ calendar in the week ahead and pending Treasury issuance in the long end of the curve. Overseas buyers must show up to those auctions or weakness will intensify....
Short covering and new position adding combined to lead S&Ps up to 1,100
after NFP, a key psychological pivot point. In the chart below you can
see why I keep saying stocks were stagnant all summer, the S&P has
traded back and forth between 1040 and 1120 since May. Boring! With the econ calendar essentially empty and fund managers chasing alpha
(returns), I expect flows to favor buyers in the short term and the
S&P to test 1120 again (1107 and 1115 will be firm resistance on the way up). If that level is broken, equity traders
will be hesitant to add more long positions until 1130 is surpassed.
S&P futures are currently +10 at 1099.50
Plain and Simple: All signs point toward higher rates in the week ahead.
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