Locking bias

Mortgage bond prices continue to slowly move lower as the market braces for this week’s job market reports.  At this point, the market is anticipating 185,000 new jobs created in the month of February.  However, given the dramatic uptick in consumer and small business owner confidence, this number seems to be on the low side.  Many employers remain enthusiastic about their futures with President Trump leading the nation.  I strongly believe that the greatest way to fix an economy is to focus on creating a positive psychology in the minds of consumers and business owners.  Given that this is what has happened since Trump was elected, we could see a more rapid improvement in the state of the US economy. 

The second reason for bonds losing ground is tied to next week’s Federal Reserve interest rate announcement.  It seems to me that the Fed will most certainly be raising interest rates.  Investors seem to be accepting this reality, which was a strong influence over the recent uptick in mortgage interest rates.  Although we will most likely see things get worse before we see improvement, the rate hike should already be baked in to current levels of mortgage rates.  If that is truly the case, a rate hike could help improve mortgage rates in the weeks to follow.  Although not by much, any positive momentum will be welcomed. 

With bonds continuing to show weakness, we will maintain our locking bias.