01 Aug Ping Pong anyone??
It was no surprise that the Fed comments from yesterday were wrapped in dovish overtones. That helped turn bonds positive yesterday afternoon after the comments were released. But this morning, Initial Jobless Claims came in at 326,000, which is the lowest figure reported since January 2008. In addition, the ISM manufacturing survey beat estimates, and was also at its highest since June 2011. Investor reaction has pushed the S&P 500 over 1,700, which in turn, has pressured bonds back to their lows of yesterday. Interest rates are stuck due to the tight ping pong type range that mortgage bonds have traded in since July 9th. Tomorrow’s monthly Jobs report by the Labor Dept will be a catalyst to move markets. Volatility will be high as always, but overall, the comments from the Fed indicate that they want to keep mortgage rates in check, meaning not higher. With bonds back down to the bottom of the recent trading range at this point, locking would protect from any more losses in the short term. But, longer term transactions could pay off by floating.