Kicking Off 2020
It’s the first full trading day of the new year with stocks and bonds all in the green this morning. Although markets are open for the full day today and tomorrow, normal trading volume is not expected to resume until next week. Therefore, any seemingly significant market fluctuation will be viewed in the context of the low holiday volume atmosphere which can result in exaggerated moves.
There are no market moving economic reports due today; however, ISM is scheduled for tomorrow. The forecast is 49.0, which would be the highest in the previous 4 months. Any surprise here would likely add extra volatility, so the markets are likely hoping for a very close number in order to keep steady until the majority of traders are back at it next week.
Even with the recent light volume environment, mortgage bonds have maintained their position in the trading range. While rates have not moved significantly in any way, bonds have quietly crept up to the top of the trading channel they have been in since early November. This means the cost of rates are on the low end right now. As volatility is expected to kick in next week, we maintain a locking bias to capture these gains.