Rates Almost Back to Pre-Trump Era

Mortgage bonds have made a break higher, above a critical ceiling of resistance that has been in place for many years. In fact, the last time mortgage interest rates were as low as they are right now is November, the day after President Trump was elected. If you remember that day, the stock market blasted higher and mortgage interest rates started an upward trend that wrecked many mortgage companies and caused many people in the mortgage industry to abandon their jobs. It is truly interesting to see mortgage rates regain almost all of what was lost over the past nearly three years. One year ago, many expected to see mortgage interest rates 5.5% or even higher at this point. Makes you realize how differently things can turn out vs. what the world economists tell you to expect.

Stocks have also improved today, making a break above both the 100- and 25-day moving averages in early morning trading. However, stocks are now up against the same ceiling that have been trapped beneath for over a month now. Are they ready to make a break higher and once again challenge new all-time high levels, or will the ceiling hold stocks back once again? This remains to be seen. I do know that with every attempt to make a break above this ceiling is likely causing the ceiling to weaken. Eventually stocks will need to make a decisive break in one direction or the other. Odds remain that the ceiling will hold. However, as we just saw in the mortgage bond market, break outs do happen.

It’s too early to say if the mortgage bond break out will hold. In the meantime, you can float if you are closely watching the markets. If bonds weaken, take advantage of the lowest rates since 11/9/16 and lock.