Surprise….

The NFP for February surprised us, coming in at only 20,000 new jobs versus estimates of 180,000. With such a significant miss, the markets would typically whipsaw and spike or tank immediately, but stocks have only gradually drifted lower with the Dow down over 150 points and mortgage bonds just 9 basis points higher. 10-year treasury yields moved lower initially but came back up to their technical level that has been intact for months. Mortgage rates generally correlate with the 10-year treasury so a convincing break below their current level would likely result in lower mortgage interest rates.

Mortgage bonds and the 10 year are both sitting at the edge of their respective ranges. While we would love to see a breakout for lower rates, this range has held intact since the beginning of the year. Each time prices hit these levels, they have bounced back and headed the other way. Until we see a decisive breakout, we will maintain a locking bias.