Trending towards higher rates

Markets opened relatively flat this morning, with the S&P 500 hitting a new 5 year high yesterday.  That pressured mortgagebonds lower which traded underwater all day and closed at their low.  That has resulted in rates pushing up 1/8% to ¼% higher, depending on the scenario.  Consumer Sentiment was reported lower than expected and hit a 1 year low.  Much of the sentiment was attributed to the “Fiscal Cliff” issue, so we can expect that the upcoming months might be similar based on the debt ceiling negotiations… that are not open for debate.  Markets are closed Monday for Martin Luther King Jr. Day, so today’s trading may lighten up for the long weekend.  mortgage bonds are slightly positive and holding on to previous support level.  Let’s see if Fed buying supports pricing here.  We will start with a cautious floating bias.  However, be mindful that the trend is higher rates over time, with some days being better than others.