Stocks markets in the U.S. are advancing once again this morning, as the nine-year bull market continues. The strength in the stock market has been fueled by strong economic news and a high level of investor optimism. This trend has been consistent both in the U.S. as well as in most developed nations across the globe. At this point, there is no clear end in sight to rising stock prices. With all-time high levels not much above current prices, we could soon be setting new records in the days to come.
It seems that concerns over a trade war are softening, at least stock investors don’t seem to be overly concerned. All eyes are now on China as we wait to hear just how they plan to respond. Since both Mexico and Canada were excluded in the final draft that was signed last week by President Trump, that is lessening the overall concern. However, we don’t expect China to take this kindly. We’ll have to see how and when they respond from here.
There is a 10 Year Treasury Note auction at 11:00 a.m. MST today. With bond yields now within a tight sideways trading range that is capped by multi-year high levels on the top and the 25-day moving average below, today could be the day for a break out. If the results of the auction are weak, we will see yields climb higher. We could have a better idea of where mortgage rates will be heading after the results of the auction have been released. Hopefully the auction is met with a strong demand.
There appears more risk to floating than locking. Therefore, we will maintain our locking bias.