Current Price of FNMA 6.0% Bond: $98.84, +9bp
Mortgage Bonds are trading higher thanks in part to a Housing Starts and Permits Report which met economist's expectations. Overall, the Report for May showed that while new housing demand is slower, the market is stabilizing.
Since this will be a slow economic news week, the technicals will play a more prominent role - and from that standpoint, Mortgage Bonds are presently looking pretty good. Take a look at the Bond Page, and you can clearly see that after testing the long-term support we identified at the $97.84 level last Wednesday, prices have now muscled their way over 100bp higher. Bonds also benefited from a Positive Stochastic Crossover, which indicates that Bonds had become "oversold", and were due for a move higher.
At the moment, the next clear ceiling of resistance is located at the “Falling Window” created on June 6 -7.
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