What's going on and why does it matter?
Mortgage bonds opened higher this morning as investors seem to be favoring the safety of bonds due to disappointing corporate earnings, another planned missile test by North Korea, and the firing by President Trump late yesterday of FBI Director Comey, which is likely to increase tensions between Congress and the White House. The economic calendar is relatively quiet today, but the Fed is scheduled to purchase up to $1.6 billion of 30-year conventional mortgage bonds. There are also a few Fed policymakers who are scheduled to give speeches today. It appears that mortgage bonds may continue to trade in a range between their 30-day and 100-day moving averages.
What should you do about it?
Watch for mortgage bonds to rebound from these levels, but be prepared to lock quickly if the market changes directions.