After matching the lows the stock market has seen since early June, the market bounced higher today. The strength in the stock market also corresponds with mortgage interest rates bouncing higher after hitting lows matched in November of 2016. This is very much a technical move, which is why it was an easy call for us to switch to a locking bias yesterday based on how the pattern of the charts were playing out. Although I believe that mortgage bond prices will eventually improve, it will take something significant to drive mortgage interest rates into lows that we haven’t seen in nearly three years. That will take a bit of time.
Consumer Confidence levels fell in this morning’s report, showing a reading of 92.1 when the market was anticipating 97.5. This was likely due to the extreme volatility of the stock market creating concern in the consumer. If the market volatility continues, we can anticipate that to continue to wear on the mindset of the consumer, which will be passed down in Retail Sales and other reports.
With mortgage bonds not only under pressure, but also still near the top of the trading range, we will maintain our locking bias.