The Battle Continues over the 200 Day Moving Average

The battle over the 100 and 200 day moving averages continues today, with mortgage bonds bouncing above and below these critical levels without much resistance.  With the Federal Reserve set to make their final rate hike of 2017 on Wednesday, this week could be a bit volatile. In the Fed Statement that will follow the assumed rate hike, we can expect to hear the Fed confirm their plan to continue the path of rate hikes in 2018, as well as continue to reinvest less into the mortgage backed securities and 10 Year Treasury Notes.  Since Fed rate hikes are to help tapper inflation, this could help mortgage rates maintain their ground or even make slight improvements.

Bitcoin continues to be the hot topic. In fact, it’s difficult to go into a public place without overhearing someone taking about cryptocurrency.  As of today, Bitcoin made its Wall Street debut, with futures of the cryptocurrency surging as much as 26% very quickly. This forced the trading to halt two times as it reached the trading limits that are in place to protect investors from loss.  The incredible volatility has not kept the average mom and pop from taking the risks and investing their hard-earned money.  As Bitcoin becomes more widely available to big money investors, we could see the value of Bitcoin move higher, but experience even greater volatility as institutional investors make short hold decisions when they see opportunities for a quick profit.

With bonds still battling critical levels, we will maintain our locking bias until a direction has been decided.