We see the trade as continuing to be range bound

Lots going on today.

  • Start of the FOMC meeting (2 day),
  • FHFA Home Price Index up .3%,
  • Richmond Fed Index unchanged at 14,
  • and the FOMC statement of last month’s meeting due for release at 1:15 pm cst.

We also have treasury auctions this week in the form of 2’s, 5’s, and 7 year notes to the tune of 112 billion.  Auction demand should be good as foreign governments will buy due to our weak dollar and the fact they own so many of them.

Both stocks and bonds have a little green on the screen.  Stocks have a bear/bull tug of war going on as bulls try to crack through the S & P resistance at 1080 and bears continue to short the market, looking for a top at the same level.  Bonds, notes, and MBS seem to trade in their own little world, range bound with good support from a multitude of buyers.  Tomorrow’s FOMC policy statement could hold the key to a trending change, especially if the Fed hints that they will be taking accommodation out of the market (tightening/raising short term Austin mortgage rates). You will want to pay attention tomorrow at 1:15 pm cst.

Technically, the weakness overnight traded to the low end of the range before boot strapping itself up this morning.  We see the trade as continuing to be range bound, bracketed by 3.52% on the high yield side (10 year note) and 3.42% on the low side.  Any move outside of these parameters will move the market for at least 1 point and a good ½ point in Austin mortgage pricing. Month end supply (112 billion) and a spooky FOMC policy statement sideswipe tilt our bias.

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