Mortgage bonds are hanging in there as investors await tomorrow’s Bureau of Labor Statistics’ report on Job gains in the month of March. After yesterday’s strong ADP report, we could be in for another blockbuster number. Of course, that would be bad news for mortgage interest rates, as strong employment growth reflects an improving economy. However, the underlying strength continues to help boost hopes of higher stock prices in the months to come.
Two of President Trump’s business leader CEO’s, Blackrock’s Larry Fink and Jamie Dimon of Chase Bank, came out with warnings regarding the nation’s economy. Fink said Thursday that U.S growth is slowing on concerns as to whether the Trump administration will be able to pass their economic agenda through Congress. Dimon, on the other hand, stated that “it is clear that something is wrong” in a 45 -page annual letter written to his investors. Both sited the growing concern over healthcare reform and corporate tax reform. If the Trump administration is not able to pass each of these, there is a strong chance that stock prices will fall as a result. With much of the post-election stock gains riding on these two election promises, it seems that President Trump could be in for a back-lash if they are unable to deliver.
Taking a position ahead of an important job release is difficult to do. We feel there is a greater chance of rates moving higher in the near term than we feel they have room to improve. Therefore, we will maintain our locking bias heading into tomorrow’s report.