27 Mar Carefully Floating
Another busy news day today. The final GDP for the 4th quarter reported growth at 2.6%. This was stronger than the preliminary reading of 2.4% last month, but still below estimated of 2.7%. Although the report was below expectations, it shows continued growth in the economy and a building momentum for 2014.
Initial Jobless Claims were released this morning, coming is at the lowest level of the year at 311,000. This is 10,000 below last week’s figure, and continues the downward trend we have seen recently. We will see if this translates to higher job creation when March’s BLS Job’s Report is released.
Pending Home Sales for the month of February were down -.8% and down 10.5% from this point last year. Again, this confirms all other recent reports that confirm an over-all slowdown in the housing market. Now that we are moving into stronger closing months, we are hopeful that we will see improvements in the months to come.
Mortgage bonds made a break above their 200 day moving average. However, they are still battling significant resistance levels. Although we broke out of a downward channel, it is too early to celebrate. We are going to suggest a carefully floating stance while we wait to see if bonds can make a decisive break above these levels. If they do, that will be very encouraging for the short term direction of rates. Watch closely, as things can reverse and deteriorate quickly.