Mortgage bonds continue to ride the same path

Mortgage bonds continue to ride along the same path, capped by multi-month highs that so far have been impenetrable.  If mortgage bonds can make a break above this critical level, they will still have about 200 basis points to get back to where they were prior to last November’s Presidential election.  Interest rates are still about ½% worse than they were in the early fourth quarter of last year.  It would certainly provide a much-needed boost to help home sales continue to be strong as we move into the slower home buying season of winter. 

Today’s bond market strength has been fueled by yesterday’s comments from President Trump stating that it will be difficult to renegotiate NAFTA trade agreements because Mexico and China have such great deals under the current form.  He continued to state that he believes that we will probably end up terminating NAFTA at some point.  This news was not welcomed by the stock market, as investors appear comfortable with NAFTA and the global benefits it brings to US companies. 

Bonds continue to remain in risky waters.  Unless bonds can make a decisive break above current levels, we will maintain our locking bias.