Rough market-Locking bias

The initial headline report from Friday’s Bureau of Labor Statistics (BLS) Jobs Report appeared to be just what the market was expecting.  With 223,000
new job creations, and the Unemployment Rate falling from 5.5% down to 5.4%, most celebrated the results as a win for the US economy.  However,
a deeper look into the report showed some underlying weakness that we feel is important to consider.  The segment of workers who created the job
gains came from those without a high school diploma.  In fact, 233,000 new jobs were created for this segment of the workforce, while workers
with a high school diploma and/or a college degree actually lost jobs.  If there truly is a correlation between education and pay, then the only
segment of job growth was for lower pay employees, many of which will likely be seasonal summer jobs for students. 

Already this morning, mortgage bonds have given up most of the gains they made on Friday.  There are very few economic reports scheduled for release
today, so bonds will trade heavily based on the technical picture, which isn’t looking good.  Bonds have broken beneath support once again and
are heading towards their 200 day moving average.  Adding additional weakness to the markets, the 10 Year Treasury Note Yield is again above its
200 DMA.  This is happening while stocks are also lower for the day.  It seems like all segments, including oil, are struggling right now.
The only things higher are bond yields…

With bonds falling hard, we are suggesting a locking bias today.  If the markets break beneath the next level of support, the near term direction
of mortgage rates will be higher.  Further, we are now at risk for the longer term outlook to change from a declining trend to increasing. 
This would be a shift in a nearly two year direction of mortgage rates.  Let’s watch the markets closely and hope this doesn’t happen.