07 Dec Locking bias
There was little movement in the markets yesterday, as investors were unable to find a reason to move them. However, bond investors woke up this morning and quickly made the move to buy, driving bond prices higher and helping to slightly improve mortgage pricing. Most significantly, the 10 Year Treasury Note yield moved beneath the critical level of 2.38%, and is not sitting at 2.35%. Since this is below the floor that we have identified in past updates, this could set the 1- Year Treasury to move down to 2.18%, which happens to be the next floor. We will be watching this closely, as the drop below could just be temporary. Hopefully, it holds.
Today is a quiet news day, so markets will trade heavily based on technical and any surprise news that happens to hit the wires. With the Federal Reserve scheduled to release their interest rate announcement next Wednesday, investors could begin to become jittery as this time approaches. It is nearly a sure thing that a rate hike will be announced. If history repeats itself, that could spell trouble for the US stock market which would be a good thing for mortgage interest rates. It will hopefully at least stabilize the bond market to keep rates from continuing their climb higher.
Although bonds are doing well so far, there remains a great risk of floating. Therefore, we will maintain our locking bias.