The Bond Market Beating Continues

2018 continues to be a brutal year so far for the mortgage market, with mortgage bonds once again taking a beating. A look at the charts shows that mortgage rates are now at the highest levels seen since 2014. Since there is no recent history to show when the next likely floor of support will be found, we look at 2014 for some clues. There is support found not too far beneath current levels. However, since this bond fall has sliced through many support levels already, we may see it continue to cause further damage in the coming days. Every market has corrections. The bond market is experiencing one right now. At some point, it will get better. Hopefully that point is soon.

Yesterday’s Federal Reserve announcement was as expected, with the Fed holding off on a rate hike at this time. However, the Fed did revise their economic expectations to the upside and confirmed that additional rate hikes are justified in the near term. We take this as a sure thing that a March hike is in the books.

Markets are anticipating tomorrow’s Bureau of Labor Statistics (BLS) estimate of new hires for the month of January. The expectations remain around 180,000. Since ADP has shown much stronger numbers than the BLS in recent reports, we could see a “catch up” where the BLS report is a blockbuster. That would add to the upward pressure on mortgage interest rates. Stay tuned. We will report back tomorrow.

More of the same….  We will maintain our locking bias.