Current Price of FNMA 6.0% Bond: $98.38, -3bp
Mortgage Bonds are trading slightly lower and have improved from the worst levels of the day as prices approached the nearest support level, located at $98.28. There are no economic reports today to influence pricing, so Mortgage Bonds will likely trade between support and resistance.
Next week is going to be very exciting with a full plate of high-impact economic reports. Existing Home Sales is scheduled to be released on Monday. New Home Sales and the latest read on Consumer Confidence are set for release on Tuesday. Wednesday brings Durable Goods Orders, but the real action begins Thursday with the Fed’s Monetary Policy Statement and interest rate decision. There is no chance of a Fed rate change next week, but it will be very interesting to hear the Fed's take on core consumer inflation, which appears to be moderating as forecasted.
Speaking of inflation, next Friday the week gets capped off with a potential market blockbuster, the Core Personal Consumption Expenditure Price Index (PCE) – the Fed’s favorite gauge of consumer inflation. At the moment, economists are forecasting the year over year Core PCE to be reported at 1.9%, which would show further moderation of core consumer inflation. This would be good news for Bonds.
After peaking on Tuesday, prices continued to drift lower under the Falling Resistance Line until touching down exactly on the floor of support at $98.28 this morning. Let's see if Bonds can bounce a bit higher from here. Should prices break below the current floor, there is real strong support at the $97.84 level
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