Bonds Under Pressure

Mortgage bonds continue to hold up, in spite of stocks repeatedly setting new all-time high records.  The move has been largely technical in nature, fueled by Trump’s pick to release Janet Yellen as the President of the Federal Reserve.  With this week being a light one for scheduled economic reports, the technical picture will continue to heavily influence the markets.  With bonds once again above their 200-day moving average, this is a strong sign. However, the 10 Year Treasury Note yield is now sitting right on its 200-day moving average.  Unless the 10 Year is able to break below this critical level, this could put an end to the improving trend we have been on.  Therefore, now is a time to be cautious.

With bonds under the pressure of the 200-day moving average, we will now switch to a locking bias.