Mortgage bonds are down today after making a strong run yesterday where they threatened to push up into unseen territory. After hitting the ceiling, they were forced back down and now remain within the channel they have bounced around in since late May. As time goes by, mortgage bonds are being pushed into a tight range. Eventually, they will either be forced higher (resulting in lower rates), or they will be held down. If held down, we will change from a long term float stance into a locking stance, as the uptrend we have enjoyed for 2+ months will no longer be intact. With Germany’s credit downgrade, the likelihood of low rates continuing looks promising. Given the recent volatility, we will continue suggesting a locking stance.