Stocks and Bonds Fall Together

After falling to multi year lows, mortgage bond pricing improved near the end of the trading day yesterday.  However, this morning they broke beneath the floor of support.  This places mortgage interest rates at multi-year highs, which is not good news for home buyers preparing to move as the purchase season begins to heat up.  Bonds are in a clearly defined downward trading channel that could continue to push mortgage interest rates higher. With no clear end in site, it’s difficult to say at what point this cycle will end.  Bonds are in a territory that they have not been in for a number of years, making this move more difficult for analysts to anticipate the next move.

Today is a very light news day, so the technical picture will once again heavily influence the markets. We are in a similar situation to yesterday, with both stock and bond prices falling. Since they generally move in the same direction, this activity is unusual.  Falling stock prices typically help improve bond prices. But that isn’t the case currently.

With bond prices continuing to weaken, we will maintain our locking bias.