21 May Cautiously floating
The bond market started the day flat, as there are no economic reports on the schedule today. Stocks dropped lower initially, but have since fought back to the positive side. mortgage bonds have hit their lows of the year which puts interest rates at the highs of the year we saw in March. However, this price level held in March and continued to push rates lower for almost 2 months. The stock market keeps pushing higher, but the moves are becoming less enthusiastic. A pullback would not be a surprise to anyone, but it certainly does not mean that the bull run is over. Mortgage bonds have been selling off due to the growing speculation that the Fed may taper down bond buying sooner than expected. This kind of move would appear premature, given the skewed Unemployment Rate that the Fed was using as an indicator to exit. It seems they would like to see more facets of the economy showing consistent improvement. Tomorrow may give us some insight to that when the FOMC Minutes are released. mortgage bonds have moved higher off of support, and are making a positive run at the moment. We will start with a cautious floating bias to see if this improving trend continues throughout the day. If it does, we may see a nice improvement in the short term.