A Recession in 2019?

Mortgage bond prices are again falling lower this morning, as stock prices continue to climb higher.  Economic indicators continue to show growth in the overall economy, which is adding headwind to the mortgage bond market.  With today being a light day for economic reports, and week being an overall light one as well, the technical indicators will heavily influence the markets.  This is not good news for the mortgage market, as the current technical picture isn’t good for interest rates.

With the Unemployment Rate hitting a 17 year low, economists who track trends are beginning to get nervous about an imminent recession not too far down the road.  A historic trend would predict a 100% chance of a recession after the Unemployment Rate hits the low for the current economic cycle.  With the current rate now at 3.8%, there is a concern that we could hit the low of the cycle before the end of 2018.  The Federal Reserve is currently predicting the rate to hit a low of 3.5%, which is extraordinarily low.  Each time the cycle low is achieved, there has been a recession within 8 months in every case reported.  That means we would likely see a recession hit in 2019 or so.

With mortgage bonds drifting lower, it seems imminent we will see rates tick higher in the days to come.  We will maintain our locking bias.