Opportune Time to Lock

Mortgage bonds experienced a gap-up opening this morning, climbing instantly above the 200 and 100 day moving averages. This is a great sign for mortgage interest rates.  However, the risk of the day will be whether bonds close the gap today.  Since gaps tend to be closed, there is a strong chance we will see bonds lose ground throughout the day and close the gap.  If bonds can remain above these critical levels, we could see rates improve.  Remember, there are no guarantees either way.  Therefore, keep in mind the general rule would be for the gap to close when deciding whether to lock or float your interest rate.  If there was a truly justified reason to support the gap up, I’d suggest floating.  But that just isn’t the case this time.

Bitcoin continues to dominate the headlines, with the cryptocurrency nearing $13,000 per coin. The insane rate of growth has attracted the media’s attention, who is largely talking about regulations the government should be imposing.  Since the run higher is largely fueled by individual speculators, a crash could cause deep pain in the pocketbooks of middle class Americans.  With many expecting the currency to hit $100,000 within a year or two, it provides great opportunity for high risk investors.  However, if government regulations are imposed, we could see the currency come under pressure.  It will be interesting to watch and see where this new world of cryptocurrency heads.

With bonds currently above their 100 and 200 day moving average, I feel this is an opportune time to lock.