Mortgage-backed bonds are coming under selling pressure this morning threatening the rate gains we made earlier on. Rates began the day .125% better than Friday morning’s rates thanks to weakness in the stock market stemming from the Yahoo/ Microsoft withdrawal.
However, mortgage-backed bonds are now beginning to sell-off as well likely in response to some inflationary imbedded in the monthly Institute for Supply Management (ISM) report.
We like the heavy technical trading support that is just below bond prices. If bond prices can hold we may see rates improve over the next couple weeks. However, if bond prices manage to break through this technical support rates will move higher before they get any better.
Current Outlook: neutral with floating bias