Weekly Outlook

Current Trend Direction: Sideways
Risks Favor: 'Staying put'
Current Price of FNMA 6.0% Bond: $99.91

The Fed Policy Statement is scheduled to be released this Wednesday, in which the Fed Funds Futures propose a 98% chance of "no action." Even so, the overall tone expressed in the minutes will dictate the direction we head this week. It seems as though a slight concern regarding core inflation has developed, especially amongst fed officials. Current core inflation reports show levels considerably above the 2% benchmark that the fed likes to maintain. That being said, most inflation reports are a lagging indicator, which is why the fed will wait to act. If core inflation doesn't start ticking down, come December we may see another rate hike of .25%.


October 25 Existing Home Sales Moderate
October 25 Crude Inventories Moderate
October 25 FOMC Meeting HIGH
October 26 Durable Goods Order Moderate
October 26 Jobless Claims (Initial) Moderate
October 26 New Home Sales Moderate
October 27 GDP Chain Deflator Moderate
October 27 Gross Domestic Product Moderate
October 27 Consumer Sentiment Index(UoM) Moderate
October 30 Personal Income Moderate
October 30 Personal Spending Moderate
October 31 Employment Cost Index HIGH
October 31 Chicago PMI HIGH
October 31 Consumer Confidence Moderate
November 01 ISM Index HIGH
November 01 Crude Inventories Moderate
November 02 Jobless Claims (Initial) Moderate
November 03 Non-Farm Payrolls HIGH
November 03 Unemployment Rate HIGH
November 03 Hourly Earnings HIGH
November 03 Average Work Week HIGH
November 03 ISM Services Index Moderate

Weekly Outlook

Current Tren Direction: Sideways
Risks Favor: Cautiously Floating
Current Price of FNMA 6.0% Bond: $100.03

Currently, mortgage bonds are trading sideways and will more than likely stay flat until tomorrow or later this week once the Producer Price Index (PPI) and the Consumer Price Index (CPI) reports post. Both reports yield inflationary data that will cause mortgage bonds to react, thus activity tomorrow and Wednesday could be high. The 200 day moving average is a proven level of support and a proven ceiling of resistance, whichever direction the trend is set will eventually have that to contend with.


October 16 Empire State Index Moderate
October 17 Core Producer Price Index (PPI) Moderate
October 17 Producer Price Index (PPI) Moderate
October 17 Capacity Utilization Moderate
October 17 Industrial Production Moderate
October 18 Building Permits Moderate
October 18 Core Consumer Price Index (CPI) HIGH
October 18 Consumer Price Index (CPI) HIGH
October 18 Housing Starts Moderate
October 18 Crude Inventories Moderate
October 19 Index of Leading Econ (LEI) Low
October 19 Philadelphia Fed Index HIGH
October 19 Jobless Claims (Initial) Moderate

Weekly Outlook

Current Trend Direction: Higher
Risks Favor: Neutral
Current Price of FNMA 6.0% Bond: $100.31

The jobs report came out lower than expectations--much lower. The number economists were projecting was 120,000, thus it should come to no suprise that a measly 51,000 did little to impress. It represents the slowest growth in jobs since Hurricane Katrina. Oddly enough, Bonds have moved lower due to investors creating an exaggerated sell off in hopes of locking in some of their gains. The stars were aligned perfectly for Bonds to move higher and rates lower, yet it never came to be. The good news is that Bonds still boast a prime position towards betterment and should see a move higher from short-term traders getting out of the market.

Here is this week's economic calendar:

October 11 Crude Inventories Moderate
October 11 FOMC Meetings HIGH
October 12 Jobless Claims (Initial) Moderate
October 12 Balance of Trade Moderate
October 12 Beig Book Moderate
October 13 Retail Sales HIGH
October 13 Retail Sales ex-auto HIGH
October 13 Consumer Sentiment Moderate
October 16 Empire State Index Moderate
October 17 Capacity Utilization Moderate
October 17 Industrial Production Moderate
October 17 Core Producer Price Index Moderate
October 17 Producer Price Index Moderate
October 18 Building Permits Moderate
October 18 Core Consumer Price Index HIGH
October 18 Consumer Price Index HIGH
October 18 Housing Starts Moderate
October 18 Crude Inventories Moderate
October 19 Jobless Claims (Initial) Moderate
October 19 Index of Leading Econ Low
October 19 Philadelphia Fed Index HIGH

Weekly Update

The BIG jobs report is due out tomorrow and should cause the market to move one way or another. Economists have posted an expectation of 120,000 new jobs created, but currently the whisper amongst traders is that the jobs will come in lower somewhere around the 100,000 mark. Then, factor in some technical data such as bonds being overbought and the favorable trend line and eventually we draw a neutral conclusion to sit tight and wait.