Bond Prices Looking for Direction

Stocks and bonds are both trading within tight channels again this morning, as markets await news to help investors decide which direction to take the markets from here. It appears that a trade agreement between the U.S., Mexico and Canada is quickly coming together, so we need to be on the lookout for this to impact markets in the near term. Negotiators worked into the night but have yet to iron out the final details. When this is announced, I anticipate stocks to react favorably and mortgage bonds to weaken.

Next week is an important one for mortgage bonds, with the Bureau of Labor Statistics (BLS) scheduled to release its estimate for new job creations in the month of August. We are still waiting on the official estimate of what economists are expecting to see. However, I assume it will be in the range of 180,000 new jobs. We will keep you updated next week.

With little hope of bonds breaking above the critical ceiling just above current levels, we will maintain our locking bias.