Cautious Float

After a rocky beginning to 2014, the stock market is pointing higher so far this morning.  mortgage bonds are higher as well, with the technical picture looking to continue the push higher today.  However, before we get too excited, we must consider that this Friday will be the release of December’s Job’s Report.  Should this come in to be stronger than expected, the bond market will lose steam and interest rates will be pressured to step higher.  However, if the report is weaker than anticipated, the technical strength may gain momentum and push interest rates lower.  Stay tuned throughout the week on updates and look for our locking position on Thursday.

Janet Yellen will be confirmed today, taking over Ben Bernanke’s position as Fed President effective February 1^st.  Most expect her to continue the trend set forth by Big Ben, with tapering to continue at a likely reduction of up to $10 billion per month and a complete exit from the bond market by the end of 2014.  With this in mind, we anticipate a general locking stance for much of 2014, with short periods of improvement.  Given the current technical picture, we are beginning today with a cautiously floating stance.