Mortgage bond prices are falling this morning. However, for the time being they remain above their 100-day moving average. With today being another quite news day, the technical picture will heavily influence the markets. With bond prices breaking a three day up-trend, the technical picture is not looking strong. Further, prices failed to break above an important Fibonacci level. Had prices broken above this critical ceiling, there would have been plenty of room for interest rates to improve. Since this level held prices back, we can now expect bonds to travel down to the bottom of the trading channel. This will likely force prices beneath their 100 DMA once again.
U.S. stocks are climbing higher again this morning, as investors anticipate good things coming out of the meeting between China and the U.S. tomorrow. The S&P 500 is on a path towards hitting new record high levels, which could happen if news of the meeting reduces fears of a trade war.
It appears bond prices will fall in the days to come. We will maintain our locking bias.