Locking bias

Mortgage bonds had a nice day yesterday.  However, all of yesterday’s gains and then some have been wiped out so far this morning following the release
of last week’s Unemployment Claims report.  New claims for the week ending 3/28 were reported to be 268,000.  This represents a drop of 20,000
from last week’s upwardly revised 288,000 figure, and was far lower than initial estimates of 285,000.  Shortly after this release, Factory Orders
were reported to be + 0.2%.  This was better than the 0% expected, and also better than last month’s figure which was revised lower to -0.7% from
the -0.2% originally reported.  This positive report sent the stock market higher, which pulled money from the bond market. 

Tomorrow is the all-important Bureau of Labor Statistics Jobs Report for the month of March.  With tomorrow being Good Friday, it will be an interesting
day in the market.  The stock market will be closed all day and the bond market will have shortened trading hours.  Therefore, the results
of the report may create increased volatility as bond traders may panic more without being able to see the stock market’s reaction to the report. 
The current estimate if for 230,000 new jobs created and for the Unemployment Rate to remain steady at 5.5%.  Since the Fed mentioned that they
are seeking an Unemployment Rate of 5.1% before hiking rates too aggressively, the markets will be closely watching for any improvement from the current
5.5%. 

With mortgage bonds at a level that they have not been able to break above since rates moved up at the beginning of February, as well as the increased
volatility in anticipation of the BLS report, we are going to suggest a locking bias.