Wealth Managers Getting Bearish on Stocks

After having a tough time yesterday, mortgage bond prices are climbing higher in early morning trading. This is a technical move higher after yesterday’s losses took bond prices all the way down to the bottom of their trading range. When this happens, the next move to follow is generally a bounce higher as we saw today. However, the trading range is so tight that we shouldn’t expect the improvements in pricing make too much of an improvement to mortgage interest rate pricing.

The financial world awoke to news from the world’s biggest wealth manager saying that it is now time to sell stocks. UBS Wealth Management Chief Investment Officer Mark Haefele is advising wealthy clients to lower the ratio of stocks they hold in their investment portfolios. This statement marks the first time since the Eurosong crisis that the world’s biggest wealth manager is bearish on stocks. This will certainly influence many to underweight stocks in their investment portfolios, which will generally drive money into the safe haven of the bond market. This will continue to add downward pressure on mortgage interest rates.

After hitting the bottom of the trading channel, I don’t expect mortgage pricing to get any worse in the near term. However, there is also little improvement we can expect to see as well. There is little benefit to floating.