Another Failed Break Out Attempt

Unfortunately for the near term direction of mortgage interest rates, mortgage bonds lost another battle in the fight to break above a critical level that could have indicated a longer term directional change.  For most of 2019, mortgage interest rates trended down.  Although at times, rates ticked up, the overall trend was a decline.  However, in early September, that trend reversed course and pointed up.  Since reversing trends is extremely rare, it was easy to predict that bonds would likely not win this battle; at least not at the moment.

Many of the economic reports released this morning were not bond-friendly and have driven mortgage interest rate pricing higher.  With strong support just beneath current levels, hopefully we will see rates stabilize.  If prices do break beneath current levels, mortgage rates are certain to take a step higher.  We need to keep a close eye on the markets.  I still expect bond prices to make a break in one direction or the other.  Odds remain that we are likely to see rates move higher in the near term.  The exception would be if we were to see a drop in the stock market.

We will maintain a locking bias.