Rate Update May 20, 2008
We mentioned in yesterday’s rate update that stocks may come under selling pressure because of technical trading patterns. Indeed that is happening this morning which is supporting mortgage-backed bond prices. Rates are modestly lower.
The technical trading picture for mortgage-backed bonds is complicated. We are going to recommend a locking stance for individuals who want to play it safe. However, for those who like to gamble, there is a chance that mortgage backed bonds could rally through technical resistance and move lower.
Current Outlook: locking