Mortgage bonds are trading near their highest levels of the
year after last week's highly anticipated jobs report came out
much weaker than market expectations. Financial markets may be cautious
this week ahead of several key events: (1) the European Central Bank is
scheduled to make a decision on European interest rates and monetary policy;
(2) there is a general election scheduled in the UK; and, (3) former FBI
Director Comey is scheduled to give testimony in Washington. The Fed will
be supportive of the mortgage markets today with a scheduled purchase of
up to $1.2 billion of GNMA mortgage bonds. It will be interesting to see
if mortgage bonds can continue to trade above their 200-day moving
average. They closed above that level on Friday for the first
time since the Presidential elections last November.
What should you do about it?
Watch for mortgage bonds to continue trading above their 200-day
moving average; but be prepared to lock your rate quickly if
bonds fall back below that critical level.
Economic reports that may impact mortgage rates this