Battling their 200-Day Moving Average

The markets seem to have very little reaction to Ex-FBI Director James Comey’s testimony this morning. If anything, stock and bond investors appear to have less concern over the potential economic impact of the ongoing Trump Administration / Russia discussion.  Comey’s testimony is that although he believes the Trump Administration lied, they did not pressure him to stop the investigation.  However, he is refusing to publicly testify about any Trump / Russia collusion that may have illegally impacted the results of the election. At this point, we’ll just have to watch and see where things go from here. Following this highly anticipated hearing, we could see chatter slow and financial markets breathe a sigh of relief.

Mortgage bonds find themselves currently battling their 200-day moving average. If they weaken further and fall below this critical level, we could see hope for a near term improvement to rates diminish. With the 10 Year Treasury Note yield breaking above its 200 DMA, chances for mortgage bonds to follow suit are high.

From a technical viewpoint, bonds aren’t looking good. The safe play will be to suggest a locking bias unless you are able to closely monitor the bond market.  If so, lock if mortgage bonds break below their 200-day moving average.