25 Apr Locking bias
Stocks are climbing higher once again this morning, and are currently within striking distance of challenging all-time high levels. Although consumer confidence is falling lower, stock investors seem to be irrationally exuberant about the future of the US economy. The primary driver is hope for tax reform, which the market is anticipating being announced by the Trump Administration very soon. If they are successful in getting this passed, that would be a significant boost for stock markets. As a result, markets seem to be preparing in advance of the announcement. This will likely cause mortgage rates to continue to worsen in the near future.
Now that mortgage bonds are off the upward channel that they enjoyed for several weeks, bonds are losing the gains made quickly. We will see bonds fall to the next support level, which means rates will likely move up at least another 1/8% in the near term.
With bonds still under pressure, we will maintain our locking bias.