07 Jun Bonds Break Above the Channel
Mortgage bonds bounced off a key support level and have climbed up above their 25 day moving average. This is a very positive sign as it pushed bonds above the downward trading channel and gives mortgage interest rates an opportunity to recover. If this bounce is above to push bond prices above their 50 day moving average, we could see rates match the lows of a couple weeks ago. It’s too early to say whether or not this will happen, but it certainly would be great to see.
With the key fear in the bond market being inflation, the amount of wage pressure we could soon see is making bond investors fearful. There is a labor shortage developing that will likely continue to drive wages higher in the coming months. As a result, we can expect to see interest rates be pressured higher.
Until we see bonds climb above their next ceiling, we will maintain our locking bias.