Stocks are again moving higher this morning, as the euphoria surrounding hopes of averting a trade war with China continue to strengthen. It was announced that China will reduce tariffs from 25% down to 15% on automobiles imported from the U.S., which will make American cars more competitive in China. This has U.S. car manufacture stocks climbing higher on the news, which is partially responsible for the overall climb in the stock market. This is good news for President Trump, showing that his initial threats of tariffs against China may in fact be yielding the results he had hoped for. Detroit automakers, for one, are very happy right now with our President.
Mortgage bonds remain in a very tight trading channel. They hit the top once again yesterday, so we can anticipate the next move will be to test the bottom of the trading range. At least that would be the likely move from a technical perspective. Tomorrow we will receive somewhat important economic news that could influence the direction of mortgage bonds. Until then, we can expect bonds to remain range bound.
There remains little motivation to float. As a result, we will maintain our locking bias.