Another Predictable Statement

With predictable timing, President Trump made a positive statement regarding the progress surrounding the trade war with China this morning.  As I’ve discussed in past market updates, the conspiracy theorist in me believes that President Trump is strategically timing his positive statements on the trade war, reserving such opportunities for times when the stock market is falling.  Since stocks have had a rough past few days, today’s comments again support my theory.  It takes a very strategic president to make such a terrible thing as a trade war something that continues to drive stocks to continue to set new all-time record highs.  Since it seems he bases a lot of the success of his presidency on the performance of the stock market, I believe this trend will continue.  Why make a final agreement when hopes of an agreement still tricks stock investors into pushing stock prices higher?

Mortgage bonds continue to battle a ceiling that represents a longer term trend line of rising interest rates.  If bonds are able to break out of this, we would expect to see mortgage interest rates improve in the longer term.  Without a break above, we will see rates continue the path of rising.  If stock prices continue to climb, the latter seems to be the more likely path.

We will maintain a locking bias.