Stocks Breaking Records, Again…

Fueled by the on-going optimistic news surrounding the trade war with China, stocks, once again, hit an all-time high this morning.  Every positive announcement surrounding the trade war has inflated prices and given investors reason to double down. Since President Trump measures much of his presidential success based on the performance of the stock market, the conspiracy theorist side of me wonders if he will delay the completion of the trade and watch stocks climb higher after every optimistic announcement.  If the market continues to climb based on rumors of getting closer to a deal, what incentive does Trump have to complete the deal?  I believe it will be a “buy the rumor, sell the news” type of situation.  I believe that once a deal is done, we will see downward pressure on stocks because the market will no longer have positive rumors to keep it propped up.

Mortgage bonds continue to fight the battle over their 25, 50 and 100 day moving averages.  These averages are preventing mortgage interest rates from improving.  Since breakouts are the exception and not the rule, we can expect to see mortgage bonds lose this battle.  Although a breakout is certainly possible, a small percentage of attempts succeed.  Unless we see stock prices fall, I don’t believe a breakout is going to happen, at least not today.  Therefore, I believe that current mortgage interest rate pricing is likely as good as it will get in the very near term.

Given the battle mortgage bonds are currently fighting, we will maintain a locking bias.