Stock and Bond Prices Falling

As expected, mortgage bonds lost the battle they have been fighting the last couple of weeks.  As a result, bond prices fell sharply and are now beneath their 25, 50 and 100 day moving averages. This is adding upward pressure on  pricing and could spell trouble for the near term direction of mortgage interest rates. Simultaneously,  the stock market is also falling, which helps confirm this is in fact a technical move vs a fundamental change.  With significant ceilings now in place, mortgage interest rates will have a difficult time improving. If stocks happen to continue to drop, that could at least provide a tail wind to help keep bond prices from falling much more. We will have to wait and see how this plays out.

Most of the economic reports of the day have missed expectations, which otherwise would have helped improve mortgage interest rates. All eyes will be focused on the Bureau of Labor Statistics (BLS) Job Report which is set to be released on Friday. It will show the estimated number of new hires in the month of November. With many seasonal retail jobs added in the month of November, it seems that we could see a higher number of new hires than the market is anticipating. That could add a headwind to mortgage interest rates. Further, as we get closer to the release, we can anticipate market volatility to increase. This could be a rough week for mortgage interest rates, so hold on.

We will maintain a locking bias.