Firm Locking Bias

Markets opened with stocks moving higher on a better than expected Retail Sales report for July.  Germany and France also produced mixed results with 2^nd quarter GDP being better than expected, but still contracting overall.  Stocks have since moved closer to even, but mortgage bonds have been pressured lower, with an open below the 50 day moving average.  This will pressure interest rates higher as investors are looking to exit bonds and move into something with a higher rate of return.  Tomorrow’s CPI report could move the markets as well.  Given that the trend is no longer moving in the direction of lower interest rates, we will firmly continue with a locking bias.