20 May Stocks Weaken Again
Mortgage bonds remain in the same position that they have been trapped within for several weeks now. Given that the U.S. stock market has fallen sharply in this time frame, it’s discouraging to see that bonds still have not found the strength to make a break higher. With stocks once again heading sharply lower today, that would normally help improve mortgage bond pricing, as investors sell stocks for the haven of the bond market. But once again, despite this, mortgage bond prices are down. Eventually, bonds will grow tired of holding in the current range and we will see upward pressure on mortgage interest rates. So, let’s hope we see some strength in the bond market quickly develop.
Today is a quiet day for economic reports, so the markets will trade heavily based on the technical outlook. Given that that isn’t looking good for bonds right now, we need to prepare for a negative price change for mortgage interest rates. We have some important housing data that will be released starting tomorrow. Given that we are entering the hot summer purchase market, I anticipate the results of the data will not be helpful for mortgage rates.
With bonds remaining under pressure, we will maintain a locking bias.