Rates Break Above Double Ceiling

Good morning,

Stocks around the world are down this morning. There’s  a number of factors that could be attributable to this but it is likely due to scares over rising COVID cases in the US and Europe as what looks like a second wave is beginning.

We got a slightly concerning Initial Jobless Claims report this morning showing that 898k people filed for unemployment for the first time last week. However, we saw a 1.2M person decrease in the Continuing Claims report to 10M individuals. A Freddie Mac economist pointed out yesterday that despite the strong housing market fueled by low interest rates trailblazing the way for the economy to recover quickly – “there are troubling signs in the larger economy”, referring to unemployment.

This morning, mortgage backed securities pushed through their double ceiling of the 25 and 50 day moving averages. This has created an awesome opportunity for mortgage backed securities to run toward the highs we saw at the beginning of the month.