Locking bias

The stock market was able to break above a significant overhead resistance level that has held stocks from improving since early January.  As often happens on days when resistance levels are broken, stocks made a sharp move higher and are now heading towards resistance at the 50 day moving average.  Of course, this corresponds with a strong move higher in the oil market, with oil prices up nearly 7% already this morning.  The relationship between stocks and oil has been so strong, that each has moved in the same direction nearly every day for many weeks now.  With oil reaching such a low point, it was only a matter of time before we saw oil make a run higher.  This could be the beginning of a strong move up for stocks, which could prove to be detrimental for mortgage interest rates. 

We learned that the United Kingdom is considering leaving the Eurozone.  As a result, the Euro and the Pound are both losing value against the US Dollar.  Although this would normally be a bad thing for the stock market and a positive move for the bond market, investors are looking at this as further confirmation that the Fed will hold off on their intended path of raising short term interest rates.  Therefore, stocks are sharply higher on the news and bonds are dropping.  This is pressuring interest rates higher.  However, Iran, which has been prevented from selling oil since 2012, plans on selling 500,000 barrels per day.  This will add to already excess supply, which could pressure oil prices lower in the near further.  This could throw a monkey wrench into the upward path of the stock market and help stabilize interest rates from moving much higher. 

With bond prices falling and stocks gaining ground, the safe play will be to have a locking bias.