Bond Prices Fall

After a failed attempt to climb above their 100 day moving average, mortgage bond prices are falling this morning. This is adding the upward pressure to interest rates we have anticipated.  With this ceiling again proving to be formidable, we can anticipate mortgage interest rates continue to climb higher as this moving average continues to drive lower.  The only way we will see rates improve at all beyond current levels is for mortgage bonds to break this ceiling. Since a decisive break hasn’t happened since September of last year, this isn’t something that should be planned on or anticipate anyone soon.

The 3rd estimate of first quarter 2018 GDP was released this morning, surprisingly coming in lower than previous estimates and lower than the market anticipated. While the prior estimate showed a growth rate of 2.2%, this morning’s came in at 2.0%. With GDP being one of the most influential drivers of mortgage interest rates, this should have helped improve the mortgage bond market. However, with the 100 day moving average being a formidable ceiling of resistance, there was no improvement whatsoever.

With bond prices falling, we will maintain our locking bias.