Locking bias

Mortgage bonds were taken to the woodshed once again this morning, driving interest rates higher. The post presidential election celebration is again adding exuberance to the mindset of the American consumer, investors, as well as employers. This morning we had a Thanksgiving size smorgasbord of the economic data to support the strong, optimistic views of the consumer. To begin with, Durable Goods orders shot up a whopping 4.8% in the month of October, which was significantly higher than the 1.5% anticipated by the markets. When stripping out transportation, orders were up 1% which was also higher than 0.2% that was anticipated. The US consumer has once again stepped back into the market of buying high ticket priced items, which has brought the previous annual deficit up to Flat for the year.

The Consumer Sentiment index rose from 91.6 to 93.8. The index is based upon a survey of 500 households, that takes the temperature of their financial conditions and attitudes about the economy. Once again, the results support an optimistic US consumer.

The meeting minutes from the federal reserve’s November 2 Fed meeting are scheduled to be released today at noon mountain standard time. Historically, fed minutes are not favorable for the bond market. We must stand guard and watch carefully how the market reacts to the release.

Hopefully, mortgage bonds will find a bottom here soon.  However, in the meantime we will maintain a locking bias.