27 Jun Bonds Face Tough Resistance
Mortgage bonds have held their ground so far. However, with limited room before they hit their 100 day moving average, there have not been any reasonable improvements to mortgage interest rates. The good news is that they have held above their 25 and 50 day moving averages for the past two trading days. With the 100 day moving average holding back rates from making improvements since September of 2017, it would be a major victory to see this level broken. As a result, I still see a greater chance of rates worsening rather than improving.
Both Durable Goods and Pending Home sales missed expectations by a large margin this morning. These low reports added concern to the stock market, which has bounced around wildly since the opening bell. Durable Goods are one of the key indicators of economic strength, as it shows the current spending patterns of consumers. This is helping to support mortgage bonds at current levels.
Unless bonds are able to break above their 100 day moving average, we will maintain a locking bias.