While the auction was not bad, we are taking a little heat as stocks are making their way back to unchanged/+. Keep an eye on current levels as we are now off 5 ticks from morning levels and price changes for the worse could be in the cards. Austin mortgage borrowers are encouraged to lock in mortgage interest rates to take advantage of the current pricing.
Last month’s auction however was a disaster with only 23.9%. Technically, we’re right up against the down trend line. This is where the battle of bulls and bears will take place and the weapon of choice seems to be the 30 year bond auction outcome (12:00 cst).
All of the above are making mortgage pricing swing like a monkey in a tree. In the short run, it’s anyone’s guess where pricing will go.
Tomorrows 10 year and Thursday’s 30 year bond auctions will tell the tale of the tape. Technically, the market is trading within the range formed since last Friday. We see the action as neutral but cautious.
The market was looking for a better number, given high hopes of a better holiday season. We see the negative December reading as unsettling, reflecting a consumer that has started to spend but at a snail’s pace.
Volatility has jumped as sellers press the market lower. Could be hedging for tomorrow’s 30 year bond auction or just a distribution trade for the new issue 10’s but nonetheless, prices are worsening.
Quiet day in the making as stocks hold most of their gains and bonds, notes, and MBS hold their shade of red. Nothing huge here as the 10 year note is off 5/32’s (yield 3.24%) and mortgage backs on the 4.50% coupon are off a couple of 32’s. Earlier today, the Australian Central Bank raised interest rates .25%, giving a clear signal that their part of the world is starting to recover and that taking fiscal responsibility is the prudent course. Wonder what Bernanke is thinking?
Strange forces at work here that are driving the market so take advantage. Technically, buyers have taken pricing through major resistance which have formed bullish readings on trend studies and oscillators. The move has also confirmed a “hammer bottom” on yesterday’s candlestick charts however, daily studies will need time to catch up for a full blown rally. Call the market, bullish, schizophrenic, Sybil (remember the movie), irrational, and interesting. It’s a lot like herding cats.
