Both stocks and bonds fell hard yesterday, with mortgage bonds crashing beneath their 200-day moving average like a hot knife through butter. Pressure was added to the markets after Senate Majority Leader Mitch McConnel announced he was postponing the vote to repeal and replace Obamacare until after the 4th of July holiday break. This major setback for the Trump Administration was followed by an announcement that one million fewer Americans would lose coverage compared to the GOP’s first failed plan. This seems to have further divided those who hoped the new plan would allow more to keep coverage. As a result, they lack the support needed to pass the bill. We will have to wait and see where things go from here.
A massive ransomware attack hit businesses on Tuesday, creating significant challenges for many companies. With some forced to shut down their entire computer systems, some businesses came to a screeching halt. This added pressure to stocks, adding to the downward pressure on prices.
In a major setback to mortgage interest rates, the 10 Year Treasury Note yield has briefly exceeded its 200-day moving average. With yields currently above 2.22%, it could set the stage for higher rates in the near term.
With rates continuing to tick higher, we will maintain our locking bias.