Mortgage Bonds Are Faltering
In this morning's trading mortgage bonds are moving lower after having dipped BELOW their 200 day moving average yesterday.
The 200 day moving average captures the moving average of the mortgage bond's price over the past year. That is why it is such an important technical signal to assist us in determing the most likely direction mortgage bonds might be headed.
Mortgage 101: When mortgage bonds are trading above their 200 day MA we expect to see lower mortgage rates ahead. When they are below their 200 day MA, we expect to see higher mortgage rates ahead.
I expect mortgage bonds to remain stable until tomorrow's GDP report and the Core PCE (Personal Consumption Expenditure) report Friday. The Federal Reserve has been watching the PCE report closely for a "tell" on what is happening with inflation.
For now, I maintain a general bias towards locking rates.
Comments