Markets were volatile yesterday, as investors took note of global issues that are sure to impact the US. Primarily, the volatility was surrounding developments over the planned “Brexit.” In the end, mortgage bonds recovered some of their losses as increased uncertainty hit the news wire. Unfortunately, the news wasn’t enough to help push bonds back above their 100-day moving average. Since bond prices have been below this critical level now for a couple of days, the risk of bond prices falling even further is elevated. Therefore, we must be on guard for a potential move lower.
Stock prices have stalled just beneath record high levels. This was expected, as history shows that past record high levels present a serious ceiling on future attempts. We will likely need some economic or geo-political news to help stock prices move higher. If this doesn’t happen soon, stock prices will likely take a steep drop in the coming days.
Given that bond prices remain beneath their 100-day moving average, we will maintain a locking bias for now.