Mortgage bonds were able to stage a decent rebound yesterday to close above
their 100-day moving average, which has been operating as a strong level of
technical support since July. The Fed is scheduled to purchase up to
$1.925 billion of 30-year conventional mortgage bonds today, and this may help
bonds to remain in positive territory. The inflation reports released earlier
today and yesterday were relatively weak, and, if this weakness persists, it
may temper the Fed's aggressiveness with regard to increasing rates in the
future. There are still a few economic releases for later this morning, and
there's one Fed policymaker who is scheduled to give a speech today.
What should you do
about it? Watch for mortgage bonds to continue bouncing higher off their 100-day
moving average, but be prepared to lock your rate quickly if bond prices fall
below that critical level.