Stocks Remain Positive
Today’s Retail Sales number for January beat expectations, but the previous months negative figure was revised even lower to -1.6 from -1.2. Markets are starting the week with stocks moving higher and mortgage bonds under some pressure. Stocks remain positive for now, even with Boeing shares down over 6% as a result of the Ethiopian jet crash. Tomorrow’s economic schedule includes CPI numbers for February, and while there are no indicators that inflation is a threat currently, any inflationary surprise is pressure to mortgage bonds leading to higher rates.
Mortgage bonds are slightly in the red, but they are holding near the top of their trading channel. As much as we want to see them break out for lower rates, they have a history of moving back the other way. Until we see a convincing break above this range resulting in a move lower in rates, we will maintain our locking bias.