We will maintain our locking bias

Stocks made a breakthrough this morning, climbing above a multi-layer ceiling of resistance that has held prices from moving higher for more than a month. Now that they are above this critical level, they are once again able to challenge all-time highs. The strength in the stock market is taking its toll on the bond market, which is adding upward pressure to mortgage interest rates. After bonds hit the target levels we have been talking about for the last couple of weeks, they have absorbed a beating as we anticipated. Since history often repeats itself, this was an easy call to make.


With Frances’s presidential election behind us, traders are willing to increase their risk level in the markets.  With a centrist now on track for the presidency, markets no longer must fear the potential risk of France exiting the Euro as would have likely happened if the conservative candidate would have won. Such move would have rocked the markets, which would have taken a toll on stocks and likely helped the bond market.  However, it seems that France will remain status quo for the time being, which is a good thing for global economic stability.


With pressure in the bond market continuing to mount, we will maintain our locking bias.

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