We will maintain our locking bias

The stock market is trying to make a bounce higher again today.  However, the common theme for stocks lately is to see a run higher in early trading, just to lose traction as the day wears on.  Overall, the stock market has already lost 10% of its value since reaching near its peak.  The scary reality is that this 10% correction follows shortly after the correction we experienced in the fall of 2015.  Two 10%+ corrections in such a short timeframe has only happened three times in history; The Great Depression of 1929, Dot Com Bubble, and the Financial Crisis of 2008.  Does this mean that history will repeat itself?  It’s hard to say.  However, it is certainly concerning and something that we will be watching closely. 

December Import and Export Prices were reported this morning.  Export Prices are -1.1% month over month.  On a yearly basis, Export Prices are -6.5%.  Import Prices -1.2% month over month and are -8.2% year over year.  Both of these are deflationary numbers, which are clearly good for the direction of mortgage interest rates.  The strength of the US dollar has continued to drive down oil prices as well as prices of other commodities.  Given the recent move by China to reduce the value of their currency, this will likely be an ongoing trend.  Although good for consumers at the gas pump and when purchasing foreign goods and services, it works against global corporations who depend upon foreign purchases.

Mortgage bonds are still battling over their 200 day moving average.  Until a decisive victory can be claimed, we will maintain our locking bias.