Locking Bias will continue today

There isn’t a lot of economic data scheduled for release today, so the markets will be trading heavily on the technical picture.  Mortgage bonds are towards the top of a channel, trapped between resistance and support.  When bonds are trading in a sideways pattern, there is little room for improvement.  Therefore, to take advantage of small gains while minimizing risk, we typically float when towards the bottom of a channel and lock when near the top.  Unless we make a break one way or the other, with will be our ongoing plan.

Oil prices continue to drive lower today.  Although this is helping to reduce the pain at the gas pumps, if prices continue to drop and stay low for an extended period of time it will eventually be harmful to our economy.  The oil industry has been a significant driver of new job creations in the US throughout our economic recovery.  In fact, if you take out all of the oil created jobs the past few years we would have a negative job growth.  As prices fall, many of these jobs will be in jeopardy.  Utah is a state with a high number of oil related jobs.  It would be one of the many states to suffer significantly from extended low oil prices.

With bonds near the top of the trading channel we will continue our locking bias.  Hopefully bonds will make a healthy move towards the bottom of the channel to build up enough steam to make another run higher.