100 Day Moving Average Stops Bonds in Tracks

After another failed attempt to maintain above its 100 day moving average, mortgage bond pricing is down sharply this morning. The resistance provided by the aforementioned moving average is fierce. In fact, bond pricing has not maintained long above this moving average since September of last year. Unfortunately, as time goes on this average continues to fall. Therefore, we can expect mortgage interest rates to continue to worsen as this level holds pricing beneath it.

It’s a relatively quite week for scheduled economic reports. However, we will see an update on consumer inflation via the Consumer Price Index (CPI) report. After May’s Headline number showed an annual growth rate of 2.8%, markets will be closely watching to see if inflation is still on a rapid rise. If this proves to be the case, we can expect mortgage interest rates to respond in-kind.

Given the technical picture, we will maintain our locking bias.