Mortgage bonds are continuing to hold their ground, as the market continues to show opposing opinions between the stock and bond markets. Generally speaking, stocks perform well when the economy is expected to perform well, and mortgage bonds perform better when the market expects the economy to fall. Right now, we are seeing both the stock and bond markets show unbelievable strength. In many cases, it takes stock investors more time before they begin to sell their holdings. This is partially due to speculative investors who move money in and out of markets as they see short term opportunities. When it becomes clear that the economy if falling, speculative investors will begin to short the stock market. That’s when you need to be exceptionally careful.
Remember the days when you couldn’t have a conversation without the topic of Bitcoin coming up? Well, those days are making a comeback. Many jumped back into the cryptocurrency as the price inflated up above $14,000 per coin yesterday. However, just as quickly as the price rose, it is now falling. Prices are now sitting at $10,700. With much of the losses on the backs of inexperienced investors, this is going to again add fear to the market.
Although rates are slightly better today, there is little hope that we will see rates have significant improvements in the near term. We will maintain a locking bias in the short term and floating bias long term.