Mortgage Bonds Manage to Hold

Mortgage bonds are holding ground today, supported by stocks which are showing a negative early technical signal.  If stocks happen to retreat more, this will help support holding mortgage interest rates near current levels. However, if stocks make another run higher, it could be time for mortgage bonds to take a break from their extended rally.

According to members of the Federal Reserve, the growth of the US economy is showing signs of weakening. This is not good news for the US stock market, which should be having a more adverse reaction to the news.  With many large financial institutions predicting very little upside potential in stocks over the next year, it remains a mystery why stocks remain as strong as they have.

Somber news of a declining housing market was released by CoreLogic this week. The real estate data company predicted a slow in growth of home values through the end of the year and the first negative value growth (-1.9%) in 9 years by April of 2021. The company claimed that “pent-up” demand and a lack of supply kept prices high through the COVID shutdowns; however, the first signs of a decline will be reflected in June’s numbers. We will keep our eyes on this!

We hold a locking bias.