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Current Trend Direction: Sideways at top of range
Risks favor: Neutral to Locking Bias
The FNMA 30-year 5.5% Mortgage Bond is currently trading 6bp lower at $102.09.
Mortgage Bond prices remain at nosebleed levels not seen in nearly a year. In fact, the last time Bonds convincingly traded above these levels was in March of 2004. But Traders are understandably cautious, as Bonds remain somewhat “overbought”, which can be seen on the Stochastic Chart on our Bond Page. In the absence of any economic reports on the docket today, Traders will seek direction from stocks, oil, and the currency markets.
Technically, Bond prices appear to be stalling from any further increase. Coupled with the aforementioned "overbought" state, this makes the Bond fairly vulnerable to a reversal lower. With no visible impetus to push Bonds higher in the short term, prices could easily drop to the closest strong support level at the 25-day Moving Average...about 40bp lower than current levels, presently at $101.72. Until some news arrives that could help Bonds bust a move, maintaining a locking bias continues to be our advice at this time.
Today’s Economic and Geopolitical News:
There are no economic reports scheduled for release today.
Crude Oil Update
Crude oil futures fell below the $45 per barrel mark early today over the belief OPEC will continue their current production in the face of lower prices along with the prospects of milder weather in the United States. Prices were lower while traders were waiting for two reports, International Energy Agency's oil survey and the U.S. Department of Energy's weekly U.S. crude and gasoline inventory report. Prices are at their lowest since early January and more than $10 below their all-time closing high of $55.17 set twice in late October. Benchmark crude on the New York Mercantile Exchange is down 43 cents to $44.85 per barrel in electronic trading while heating oil is down to $1.2235 per gallon. Brent Sea crude oil is down 31 cents on the International Petroleum Exchange to $42.73.
US Dollar Update
The dollar strengthened against most other major currencies in early trading this morning while Gold continued to fall. The dollar hit an eight-week high against the yen at 105.87 yen, gaining 0.93 percent so far on the day. The dollar traded at $1.2743 per euro, close to a three-month high at $1.2729. The dollar also traded near a 3-1/2 month high against the Swiss franc at 1.2237 Swiss francs, up from 1.2152. The British pound was quoted at $1.8546, down from $1.8660. Meanwhile, gold ranged from a recommended price of $411.50 per troy ounce in London to $411.28 in Zurich and $412.75 in Hong Kong.
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Be sure to checkout our economic indicators glossary at the link below to help interpret the significance of economic reports.
MMG Economic Indicators Glossary
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ECONOMIC INDICATOR CALENDAR AND FORECAST
All times listed in the table below are Eastern.
Economic Calendar for the Week of February 07 – February 11
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