Locking bias

Mortgage bonds continue to show resilience and the 10 Year Treasury Note yield is currently just a hair beneath its 200 day Moving Average. This strong sign is encouraging as we watch to see if rates will be able to take another step lower.  That would be great news for the housing market as we move into the slower months of winter where fewer homes are sold.

Yesterday’s mid-term election had created concern within the Republican Party as to if the overall Democratic win will be a sign for more losses when many Senate and House seats are up for a vote. This could be a sign of trouble to come for the Trump Administration.

Stocks are pointed lower this morning. With very little economic news driving the markets, the technical outlook will be the primary driver. So far, this is looking good for mortgage bonds. President Trumps statements last night to North Korea may have stock investors a bit worried as they await a response from Kim Jong-un. If history repeats itself, we can expect defiant words in return for Trump’s verbal threat for them to stand down. That could help mortgage bonds take the next step needed.

Bonds still in a vulnerable position, we will maintain our locking bias until bonds have a more comfortable lead.