What's going on and why does it matter?
The mortgage bond rally seems to have stalled in spite of heavy bond purchases from the Fed yesterday. It will be interesting to see if mortgage bond prices can hold above their 30-day and 200-day moving averages, especially in light of the large supply of corporate and government bonds that are scheduled to hit the market this week. The Fed is scheduled to purchase up to $1.1 billion of GNMA mortgage bonds today, but they won't be buying any bonds tomorrow due to the release of their monetary policy statement. The market doesn't expect the Fed to increase short-term rates tomorrow, but investors will be looking for any changes to the language used in the Fed's statement about their future bond-buying plans. As for today, the market will likely take its direction from the headlines coming out of Washington. In addition to the continued headlines about the Trump/Russia saga, the Senate is scheduled to vote on whether to begin debate on the health care bill.
What should you do about it?
Watch for mortgage bonds to remain above their 30-day and 200-day moving averages, but be prepared to lock your rate quickly if bonds start to fall back below these critical levels.
The mortgage bond rally seems to have stalled in spite of heavy bond purchases from the Fed yesterday. It will be interesting to see if mortgage bond prices can hold above their 30-day and 200-day moving averages, especially in light of the large supply of corporate and government bonds that are scheduled to hit the market this week. The Fed is scheduled to purchase up to $1.1 billion of GNMA mortgage bonds today, but they won't be buying any bonds tomorrow due to the release of their monetary policy statement. The market doesn't expect the Fed to increase short-term rates tomorrow, but investors will be looking for any changes to the language used in the Fed's statement about their future bond-buying plans. As for today, the market will likely take its direction from the headlines coming out of Washington. In addition to the continued headlines about the Trump/Russia saga, the Senate is scheduled to vote on whether to begin debate on the health care bill.
What should you do about it?
Watch for mortgage bonds to remain above their 30-day and 200-day moving averages, but be prepared to lock your rate quickly if bonds start to fall back below these critical levels.
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