Stocks are climbing higher this morning, as stocks rally back into the upward trading channel, they have been in for the past few weeks. Although this is a strong move for stocks, they are currently not too far from a very strong ceiling of resistance that could put an end to the rally. If they do happen to break above this level, we will likely see interest rates further deteriorate. However, it seems more likely that this ceiling will hold, which could provide some stability for mortgage interest rates.
When you look at the strength of the stock market, it seems unreasonable to see such a powerful move higher considering that the Fed is nearing the end of their balance sheet reduction, the federal shutdown is in its 2nd month, global economic slowing, and a real estate slowdown here in the US. All of this points to signs of a slowing economy heading our way, which will eventually lead to weakness in the stock market. This will eventually lead to lower mortgage interest rates. However, it’s hard to say exactly when this will happen.
Without knowing for sure if the run higher in stocks will continue, the safe play is to lock.