Markets are relatively flat this morning, making it difficult to know which direction the day will take mortgage bonds. With bonds in the middle of a trading channel, they could go either way.
Advancements in the tax reform bill will likely continue to drive stock prices higher. Generally speaking, this is negative for mortgage bonds and the near-term direction of mortgage interest rates. With the realization quickly setting in that this will likely be a reality later this year, we can now begin to plan how to spend the extra money many will have in 2018. This will certainly help drive the U.S. economy higher.
With bonds unclear of their path today, we will maintain a locking bias.