21 Aug Bonds still below a strong ceiling of resistance
Mortgage bonds have been able to maintain their position right near multi-month highs, which has helped keep rates at near their lowest levels since early last November. Bonds have been fueled by weakness in the stock market. Interestingly enough, stock volatility has primarily been a reflection of political news vs weak economic data. Therefore, fundamentally this rally could die down if racial and geopolitical news slows. Since bonds have not been above current levels in nearly 10 months, it seems unlikely that it will happen in the near future. Therefore, mortgage rates have been and are now as low as we will likely see. Although anything can happen, the odds are against bonds breaking out of the current ceiling of resistance.
Today is a quiet economic new day, however, the week has a lot of news on the housing market. Since housing has been a shiny spot in our economy, we anticipate the data to come in strong. Generally speaking, strong economic news helps fuel growth in the stock market and adds upward pressure to mortgage interest rates. We’ll have to see how things play out this week.
With bonds still below an extremely strong ceiling of resistance, we will maintain our locking bias.