Mortgage bonds fell through the 100 day moving average in early trading this morning. With no real news today to move markets, technicals are coming into play. After days of tying to make a more dramatic move above the 100 DMA, mortgagebonds seem to have given up the fight and will now face resistance at the 100 DMA. The only likely help in the near term to help push bonds back above will come tomorrow when unemployment claims are released. Should that come in to show more people making first time unemployment claims, mortgage bonds will likely push higher. However, should the opposite come to fruition, mortgage bonds will likely fall to the bottom of the trading range, pushing interest rates higher in the process.
With bonds now showing weakness, we will suggest a locking bias. Relative to where interest rates are expected to be in the months to follow, locking in now is a great plan.