Existing home sales were reported down 5.1% in January, which is well below expectations and also at the lowest levels seen in 18 months. Mortgage bonds faced another rough day yesterday. This is concerning mainly because the soft economic reports released yesterday should have sparked a rally in the bond market. Since this didn’t happen, it leads me to believe that we are heavily influenced by technicals right now. Given that the bond market appears to be setting up for a heaving decline, that is concerning to the direction of interest rates.
Mortgage bonds are still facing significant overhead resistance. When you consider all these factors, we will maintain a locking bias. Next week’s battle in both the stock and bond markets could create for a volatile week. Stay tuned, we will keep you posted!