21 Nov Locking bias
Initial jobless claims came in at 323,000 versus the estimate of 333,000, but the big news was yesterday’s FOMC Minutes that indicated the discussion of possible tapering sooner than later. It shouldn’t have been a surprise, given many members of the Fed are fairly vocal regarding their opinion. The markets reacted and mortgage bonds fell hard from the 200 day moving average. That resulted in interest rates pushing up a notch. Coincidental or not, it’s bizarre how frequently these moving averages can predict strategy and guidance. Perhaps the saving grace for interest rates is Janet Yellen’s smooth transition to new Fed chief. While she is not quite there yet, no one seems to be interested in obstructing her confirmation. Her comments to the Senate Committee indicate a highly probable continuation of QE3. mortgage bonds are now trading below the 200 and 50 day moving average, but holding at previous support of the 100 day moving average. Short term transactions should consider locking in order to avoid volatility.