Locking bias
As discussed in Friday’s update, mortgage bonds faced a significant ceiling of resistance that ultimately forced prices lower when the market opened this morning. For the ones who locked on Friday, congratulations! You achieved nearly the best pricing mortgage rates have been in months. For those still needing to lock, not all hope is lost. We still have strong support levels provided by the 25 and 50 day moving averages. Although it’s not possible to say for sure if these support levels will hold, it’s better to have them beneath us vs above us.
This will be a heavy news week, highlighted by GDP, Housing Data and Inflation Data. Further, several Federal Reserve members are scheduled to speak throughout the week, including the Fed Chair, Janet Yellen, on Friday. The Fed comments will be very important as the markets look for clues as to whether they play to hike rates when they meet next on March 15th. At this point, it seems irresponsible for the Fed to hold off on a rate hike. With the job market near full employment, an irrationally exuberant stock market, as well as inflation numbers at or above the Fed’s target rate of 2%, rates should be much higher than they are today. Although there is less than a 50% of a rate hike announcement as of this morning, I feel that will change as March 15th approaches. More economists will see the reality that a hike is needed and expectations will be increased.
Given the weakness in the bond market, we will maintain our locking bias.