Carefully float into the New Year

Mortgage bonds continue their slow climb higher today, breaking above multiple layers of resistance in the last three days. We have officially recovered all that was lost following the interest rate hike from the Federal Reserve. The 10 Year Treasury Note yield is sitting right on its 25-day moving average. If it can muster the strength to break beneath this level, we will likely see mortgage bonds improve significantly. It will leave a large range to travel before hitting the next level of resistance in both markets. That will likely bring the base mortgage rate beneath the critical 4% range once more. With interest rates in the upper 3’s, we could see a surge of activity in the housing market as potential buyers step in to lock a rate before they head higher again.

Today is another slow day for scheduled economic reports, so markets will trade heavily based on the technical picture. With momentum on the side of the bond market, the final trading day of 2016 is looking to end on a high note.  Although the stock market will have a full trading session today, the bond market will close at noon MST in observance of the New Year.

With bonds continuing to climb higher, we will maintain our carefully floating bias.

We wish you a safe and prosperous New Year and hope that all your goals and plans come to fruition in 2017!