Phil Grossfield's Blog

Iron Man Sings.  I love music…you know this to be true. But did you know I’m a science fiction geek?  You probably knew that as well, eh?  I wonder how much your other AEs reveal about their personal lives. No matter. Yes, it’s true, I’m a science fiction geek who loves music. That’s why I found this particularly interesting…Robert Downey Jr., otherwise known as Iron Man, sings Driven to Tears with Sting.

As long as Iron Man is now on all of our minds, I’ll go on record to say that my favorite of the trilogy was Iron Man 3, then Iron Man 1, and last Iron Man 2 which I thought was just okay. As far as his singing ability goes…not too shabby!

My Market Watch:  Bonds Up – Pricing Improved.  The Fannie Mae 30-Year Bond is up this morning +30bps from yesterday’s close.  When traders buy bonds our rates/pricing improve…it’s as simple as that.

Since the bond opened much higher this morning from yesterday’s close, Capital Markets has already priced these gains into this morning’s rate sheet. Therefore, logic dictates that it would be unlikely we’d see a mid-day reprice improvement.  However, I have seen a pattern with Interbank where they will come out with conservative pricing after a big jump from the previous day’s close. Then, after waiting a few hours to see how the market reacts they will issue a reprice improvement. I’m hoping this trend comes true again today.

Positive housing data takes credit for trader’s motivation to buy bonds.  For example, it was reported the price of homes increased for December. This is good news because some of the guesstimates I was reading inferred the housing data might be weaker than anticipated. One reason analysts may have thought this is because of bad weather. But some of the housing data is being reported before the real nasty weather kicked in, i.e., December. Regardless, the good economic reports in housing data are resulting in traders investing in bonds, and when they do that our pricing improves.

The 30-year Fannie bond is trading in a comfortable space, away from any impending ceilings of resistance or floors of support. That is, there is no technical reason for traders to feel the bond will sell off. Assuming the bond levels out this afternoon, we could have a nice week in rates/pricing. The only barrier to this is if traders feel compelled to take gains realized and sell off bonds, but I think this is unlikely based on how things look presently. Let me know if you have any comments or questions….