We will maintain a locking bias

The stock market is making a move higher this morning, getting a boost from a higher than expected Retail Sales report.  After suffering great losses over a period of six trading days, it is unclear whether this is the beginning of a turnaround that will put stocks back into record high territories, or if this is a step higher in an overall downward move.  Most experts believe the market will continue to move higher.  However, the realization that so called “experts” are wrong almost as often as they are right, only time will tell if improvements will continue.

Today is a light day of economic reports, so the bond will be taking its direction from stocks and technical indicators.  So rate today, mortgage bonds are a bit lower, and are currently trading just above their 50 day moving average.  If stocks do move higher, it will likely be at the expense of mortgage bonds, which will put upward pressure on interest rates.  However, should the downward momentum from last week take hold again this week, we could see mortgage rates take another step lower.  That could certainly help boost our summer home purchase market, which would provide a much needed stimulant to our economic recovery.

With mortgage bonds trading in a down to sideways pattern today, there is no reason to float.  Therefore, we will take a locking bias for now as we wait to see what direction the stock market will take.