Bryan Flynn Central Mass and Worcester Mortgages

Mortgage bonds are up 22 bps this morning. After the selloff Friday afternoon, pricing should be right inline with the Friday morning rate sheets. Just 9 bps higher and bonds hit the strong resistance level at the 200 day moving average. Wait and see what rates do after the ISM number is released this morning at 10am.

The ISM is released on the 1st business day of each month reflecting the manufacturing industry for the previous month. Its a survey of purchasing executives at roughly 300 industrial companies. A number above 50 show expansion and below 50 contraction.

Last month's number was 48.6 and it is estimated this month to be 48. Stay tuned...as it is a market mover.

Update 1040am: ISM came out at 49.6 better than expect but doesn't seem to be enough to break through the 200 day MA

Mortgage Bonds are up 41 bps as of 910am this morning. Core PCE, Personal Consumption Expenditures without food and energy, was released this morning in line with estimates, inflation is still under control. Year or Year PCE is 2.1% slightly above the Fed's target range of 1-2% but this the Fed expects that to creep up in the coming year more before it retreats back to their comfort zone.

Expect a nice pop in rate sheets this morning has bonds test resistance at the 200 day moving average. Yesterday bond did rally late day and close very near this open, this shows indecisiveness with the bulls and the bears, but give the bears the edge for now. The close yesterday should be a new level of support which would potentially narrow the trading range of bonds. Bonds are 1 tick below the 200 day moving average at their highs of the day, if stocks have a down day we could see a break above, but confirmation would have to be made next week as well for it to stick. See chart below:

See how rates sheets look this morning with pricing and realize this could be the best we will see for the next few weeks. Sit tight and be prepared to lock, a very very cautious float for now.

Well so much for hoping rates would stay above the 200 day moving average as I hoped ina blog post last night: May 28th Mortgage Bond Chart

Bonds gapped open lower today by a negative 31 bps. We are now down 75 bps are should lock everything under the sun for now as there is still a decent amount of downside in the bond market.

The GDP grow for the first quarter was revised upward to 0.9% from 0.6% and the job market is still showing some stability. Overall decent news. Watch for my selling pressure this afternoon. Bonds have been in a sideways trading range since the middle of march and it seems we have broken through the downside of that range today.

Today I posted my mortgage market update for the day and recommended to FLOAT because we had tested a key level of support at the 200 day moving average which we did bounce off. Just after 1pm, bonds did fall through that support and I changed my bias to a LOCK position, so I updated my blog to let people know . Most lenders did reprice their rate sheet for the worse so it was the prudent advice. The bond market did rally back however and close right above the 200 day moving average. So tomorrow we should see some better pricing and if the PCE on Friday is in check even better pricing.

The chart above shows the Fannie Mae 5.5% coupon mortgage bond. Each "candlestick" represents one trading day. The green ones are days the close is above the open and the red are days the open is above the close. The shaded in area is the open and close and the lines above and below are the high and low. The circled candlestick on the right is today's, May 28th, 2008, trading day; as you can see the bonds dropped below the "S1" and "S2" (levels of support lines) during the day (that is when I recommend to lock) but then closed at the the bottom of the red shaded part, priced at 99.47 and the 200 day moving average is one tick below at 99.46. This is a positive indication technically for bonds but if we have negative economic news tomorrow that is inflationary we could easily drop below that. This is what we mortgage professionals watch on a daily basis. So make sure you do your shopping around and working with a professional that has access to this.

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The above Mortgage Market Update information was provided by Bryan Flynn of Westport Mortgage Corporation. Bryan can be reached at westportmortgage@gmail.com or by phone at 508.635.2780. Bryan has worked in the Central Mass and Worcester area for the past 6 years as a mortgage loan officer.

More than likely, this is one of the largest and most important financial transactions you will ever make. I have a desire to help people out and love my job. You might need a mortgage only four or five times in your entire life... but I do them every single day. It's your home and your future. It's my profession and my passion. I'm ready to work for your best interest.

For more information on my service please check out my Central Mass and Worcester Mortgages website or you can click to view Bryan Flynn's Mortgage profile

Durable goods orders were released this morning for April coming in better than expected at -0.5%. The estimate was -1.5%. Durable goods are manufacturing goods that are expect to last at least three years. Usually a better than expected number means that companies are spending extra capital on equipment for future growth and the economy will be doing better down the road while inflation could be reduced. However the March number of a growth of 0.1% was revised downward to -0.3% which the mortgage bond market is not taking well. Bonds are down 31 bps after bouncing off their lows of 50 bps at the 200 day moving average.

I recommend a FLOATING position on all new business because it seems that the damage has been done for now and bonds have held and bounced off a key level of support.

Oil is below the $128 barrell mark this morning and the stock market is just in positive territory.

Update 1:15pm 5.28.08 LOCK 'EM we just broke through the 200 day moving average, not good!