What's going on and why does it matter?
Mortgage bonds opened this morning near their best levels of the year, after rallying last week in response to the drama unfolding in Washington DC. Mortgage bond prices seem to have established a new trading range between their 30-day and 200-day moving averages. This is good news for mortgage pricing because bonds haven't approached their 200-day moving average since the US Presidential elections last November. It will be interesting to see if mortgage bonds can hold their ground in this week's trading.
The stock market seems to be opening the week in better shape, and bond prices may start to back down from their lofty levels. The economic calendar is light today, although there are several Fed policymakers who are scheduled to give speeches. The Fed's mortgage bond purchases will be lighter this week vs. last week, and their mortgage buying activity today is limited to $525 million of 15-year conventional mortgages.
What should you do about it?
Lock your rate while bond prices are at the top of their recent trading range.