19 May Locking bias
Stocks are climbing higher once again today, essentially erasing the significant losses experienced on Wednesday between yesterday and this morning. This has driven the cost of mortgage interest rates a bit higher, as the ceiling of resistance discussed in Wednesday’s update proved too strong to penetrate. With bonds now trapped between a strong floor and a seemingly impossible ceiling, the technical picture looks interesting. Although we could see bonds make a break higher in the days to come, we are more likely to see the opposite happen.
As news of the ongoing drama surrounding President Trump’s rough week in the White House continues, investors continue to watch the stories as they unfold. In prepared remarks before House and Senate lawmakers, Deputy Attorney General Rod Rosenstein stated that he felt it was the right move for President Trump to fire FBI Director James Comey. His writings sharply criticized Comey’s handling of the probe into Hillary Clinton’s use of her private e-mail server. This briefing comes on the heels of President Trump’s first national trip since the inauguration. He is clearly hoping that next week will be a bit friendlier to his administration, and to have more positive news for the media to report on.
Given the strong ceiling of resistance not too far above current levels, we will maintain our locking bias.