The US stock market came out of the gates strong this morning, looking to once again challenge its 200 day moving average. Since stocks have found stability just below this critical moving average, there will likely be very far fewer sell orders triggered as stocks run up against this level. However, I don’t anticipate stocks to break this level upon their next attempt. I suspect it will take a few more tries before there is much hope for stocks to make another significant run. When this does happen, we can expect to see a significant headwind on the mortgage bond market, which could push mortgage interest rates to set new multi-year highs. Be on guard and watch the market closely if you are needing to lock a rate in the near future.
Today is an important day for both the stock and bond markets, with mid-term elections and a Fed interest rate decision both slated on the calendar today. Although there is zero chance of a Fed rate hike, markets will closely be listening for any change in verbiage following the Fed statement. As for the elections, Democrats are feeling confident they will take the Senate back, which could cause a headwind for President Trump and the execution of his agenda. The stock market could react negatively to a Democratic win, which could help support bond prices tomorrow. In the meantime, markets will likely be hesitant to make any significant moves.
Given the unknowns of the election reaction, we will maintain our locking bias.