Mortgage Bonds struggled today as resistance provided by the 100-day Moving Average kept a lid on any attempted advances.
Starting the day, Jobless Claims came in better than expected, down 565K, as opposed to the 600K estimated. We will have to wait and see if this number gets revised. However the number of existing claims rose by 12,000.
The $11B 30-Year Auction showed a 2.36 bid-to-cover and indirect participation of 50.2%.
The benchmark 4.5% Mortgage Bond closed at $100.12 but the effect of this rollover is minus 47 basis points.
Therefore, while the bond quote for today shows minus 81bp, the minus 47bp rollover adjustment must be accounted for. This means that pricing actually closed down 34bp on the day.
All three major indexes traded mostly flat throughout the day, however ended in the green for the first time in more than a week.
Crude Oil traded in the red for most of the session and even broke below the $60 threshold before closing the day positively at $60.48.
What news will tomorrow bring with the Balance of Trade and the University of Michigan’s Consumer Sentiment Index scheduled for release.
Bonds continue to remain in an overbought state and with more second quarter earnings to be announced, the roller coaster ride should continue
D Fragoso