Important read today

Mortgage bonds stabilized yesterday but were again unable to make a break above their 200 day moving average. Many times in the past where bonds have reached this level, it has been quickly followed with a sharp move lower. We are now at a heightened risk of another drop lower. Bonds have already lost 20 basis points this morning, which is happening while stocks are flat on the day. If stocks are able to muster the strength to rally today, bonds will likely suffer. That could push bonds down towards the bottom of the sideways channel they are now floating within.
The Mortgage Bankers Association released their Mortgage Application Data for last week, which showed a strong improvement from the week prior. It was reported that Purchase Mortgage Applications were up 9% to its highest level since June. The sharp increase was attributed to the Federal Reserve Meeting where it was decided to hold off on any increase for now.  In the consumers mind, that provided an opportunity for them to purchase a home before interest rates increased. However, the reality is that the Federal Reserve does not control mortgage interest rates, and mortgage rates may actually have improved had the Fed had the courage to make a move.
With bonds still trapped in a tight channel, there is little hope of a break higher today. Therefore, we will maintain our locking bias.