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MBS Highway Daily Updates 12/29/2022

Current position: Carefully Floating


Stocks and Mortgage Bonds are both higher so far this morning.

Diana Olick spoke on CNBC this morning and gave a grim outlook on housing, as usual, saying that it may be a tough winter and that housing was "frozen."


She talked about the November Pending Home Sales report being weak, despite the drop in rates that month. But rates didn't drop until November 10, when the lower CPI report came out, and you don't get a signed contract the next day. It takes time and is not going to show up in the numbers right away.


Initial Jobless Claims

Initial Jobless Claims, which measures individuals filing for unemployment benefits for the first time, rose 9,000 to 225,000. Continuing Claims, or those that continue to receive benefits after their initial claim, rose 41,000 to 1.71 million. Continuing Claims have risen by almost 400,000 over the last three months. This is a sign that once individuals are laid off, they are having a hard time finding work as companies are not hiring.



Technical Analysis

Mortgage Bonds continue to trade in a range between support at the 50 - day Moving Average and a dual overhead ceiling at the 100 - day Moving Average and 100.758 Fibonacci level. Bonds tested support, but bounced higher from it. Looking at the stochastics, which is a momentum indicator, bonds are starting to form a positive stochastic crossover, which once completed, portends continuation to the upside. The 10 - year is trading in a range between support at the 50 - day Moving Average and overhead resistance at 3.90%. If yields can get under the 50 - day, there is a lot of room for yields to improve and move lower. Similar to Mortgage Bonds, the 10 - year yield is in oversold territory and beginning to form a crossover, which typically leads to a follow through to the downside in yield. Begin the day carefully floating.


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