The stock market has again proven its resilience, with most indexes rivaling their all-time highs. The sentiment in the equity market is still strong, with the recent comments from Fed President Janet Yellen relieving fears within the market that interest rate increases will cause corporate finance fees to hit the bottom line of large corporations. The strength in the stock market has not deterred bond investors from pushing bond prices higher. It is a positive sign when both the stock and bond markets move higher simultaneously. Since they compete for the same investment dollars, they typically move in opposite directions.
Today is a very quiet news day, so the markets will trade heavily based on the technical picture. The 10 Year Treasury Note Yield continues to trade below the critical 2.02% level. This is helping support mortgage bond prices and holding interest rates down. With mortgage bonds now trading above their 50 day moving average, it will be a very positive sign if mortgage bonds and the 10 YTN can end the day above support. This could set mortgage bonds up for a strong start when the market opens on Monday.
With bond prices now higher, it is a great opportunity to lock in a great rate. If you choose to float, be careful. The increase in volatility makes predicting the markets very difficult. Sentiment can reverse quickly, causing mortgage pricing to deteriorate quickly.