10 Jun Locking Bias
Markets started the day with stocks relatively flat and mortgage bonds under pressure again. There are no economic reports scheduled today, but credit agency Standard and Poor’s upgraded the USA’s rating from negative to stable. This is helping stocks hold positive territory for now. mortgage bonds have broken beneath support and are now in a range where strong support is about 180 basis points away. In all likelihood, we may very well fall down to these levels. Should this happen, rates will jump another .375% or so on top of the close to .75% increase we have experienced since early May. The significant movement in rates has been primarily driven by the Fed talking about tapering QE3. We will suggest a locking bias, as the move in rates has occurred fast and furious, with no signs of stopping….