Stocks are higher and mortgage bonds are lower as we start the day. The stock market has made an impressive move higher over the past few days, as it snubs its nose at those who thought the market was in the beginning phase of a significant correction. In studying the charts, it is clear to see that stocks have made a seemingly unstoppable climb higher, and appear due for a slowdown. However, based on its performance, the slowdown may not happen anytime soon.
There was encouraging news regarding purchase loan applications. This morning’s report showed the purchase index up 1% from last week. Further, housing starts were reported at 946,000, which is better than last month’s upward revised figure of 920,000. Although a bit slower than estimates, the housing market is making a slow but steady climb higher. With housing being a significant driver of our overall economy, it is critical to have these numbers grow; especially during the typical high volume months of summer.
With mortgage bonds skipping along the 50 day moving average, there doesn’t appear to be any significant reason to float. The stock market continues to be a headwind for bonds, and most economic reports have been favorable lately. Therefore, we will maintain our locking bias.