Mortgage bonds broke beneath a critical floor of support provided by the 100 day moving average. This is a highly destructive sign for mortgage interest rates, as it is a moving average that mortgage bonds have not been beneath since late 2018. Given the significance of this, if bonds don’t quickly recover, we can expect to see mortgage interest rates continue to climb higher. However, since breakouts are the exception and not the rule, there is still hope that bonds will recover. Much will depend upon the stock market as it has been very strong. As stocks approach all-time high levels, we may see stocks find a reason to fall. If stocks continue to climb, hold on to your hat. Rates are going up even more.
Today is a slow day for scheduled economic reports. The news will heat up as the week progresses, highlighted by several reports on the strength of the housing market. Given the strength, but overall conflicting reports, we can expect to see strong numbers reported. This could also hurt mortgage interest rates.
There is tremendous risk in floating. We will maintain a locking bias.