25 Apr Locking bias
Mortgage bonds remain in a downward fall as they continue the trend set forth last week. Mortgage rates have been pushed about 1/8% higher in the past few trading days. At this point, there is no clear sign as to when the damage will be over. Bonds have another 20 basis points to go before hitting the next floor of support. It seems to be a fore drawn conclusion that things will get worse before we see improvement. This is also supported by higher 10 Year Treasury Note yields, which have now broken above the critical 1.9% mark. Yields on the 10 YTN could easily shoot up to 1.96% before hitting the next ceiling of resistance. If you have a loan in process, hopefully you locked in last week.
The stock market continues to show weakness again today. Oil prices also fell, and are now down 2.3% for the day. This would typically help support mortgage bonds. However, that clearly isn’t the case today. If the stock market continues to fall in the days to come, that could help mortgage bonds find the support they need to stop the losses.
With mortgage bonds continuing to drift lower, we will maintain our locking bias.