September 13 - September 24
MMG Update - Tuesday September 14, 2010 9:38am ET
Current Trend Direction: Stabilizing
Risks favor: Carefully Floating
Current Price of FNMA 3.5% Bond: $100.12, +28bp
After yesterday's big rally, Mortgage Bonds are moving higher today, despite the better than expected number from Retail Sales.
Both Stocks and Bonds are battling technical levels…Mortgage Bonds are currently up against a tough level of resistance at their 50-day Moving Average, while Stocks - as measured by the S&P 500 - are fighting to stay above their 200-Day Moving Average. As you know, Stocks and Bonds tend to move in opposite directions, so the outcome of these tugs-of-war will dictate the direction of today's trading.
The Commerce Department reported today that Retail Sales for August rose 0.4%, just above the 0.3% that was expected. It was the highest reading in five months and was probably helped by back-to-school sales. In comparison, Retail Sales for August of 2009 came in at 3.6%, so the economy has slowed. When stripping out autos, Retail Sales rose 0.6%.
The National Federation of Independent Business reported today that its Small Business Optimism Index gained 0.7 points to move to 88.8 in August, but the index still remains at low levels given the current economic slowdown. Small businesses are becoming more positive regarding the future, but hiring does remain weak.
For now, we can continue to recommend a Carefully Floating bias, as we watch how both Stocks and Bonds fight their present technical battles.
Jeff Doss
Mortgage Loan Officer
Bank of America Home Loans
1960 Riviera Drive Ste. A
Mount Pleasant, SC 29464
843-343-5913 Cell
843-216-7112 Office
866-923-8730 E-Fax
http://mortgage.bankofamerica.com/jeffdoss