Market Update

Mortgage Bonds are trading lower after some mixed news on the housing market. With high inventories and soft sales, builders may not be in a position to start actively building new homes. It will likely take more time before we see a clear stabilization in the Housing Sector. In other news, at 2 p.m. Eastern Time today, the Fed Minutes and forecasts will be released. It will be interesting to hear the Fed's outlook for future rate cuts--as well as their forecasts on GDP, PCE, and Unemployment. Although Bonds have started the day to the downside, I am still recommending to float, as the Bond is trading right near support at the 25-day Moving Average.

Market Update

The big news of the morning - Goldman Sachs downgraded Citigroup to a "Sell" from a "Hold", saying that Citi could have to write off an additional $4 Billion due to sub-prime mortgage related losses. This announcement has applied pressure on Stocks, which in turn has boosted the Bond Market slightly higher. Technically, Bond prices continue to ride the "Up Escalator", and are supported by both the 25 and 50-day Moving Averages. I will continue to recommend Floating as long as Bonds remain above this floor.

Market Update

Mortgage Bonds are trading slightly lower but have improved from their worst levels of the morning, which was an exact touch on support at the 50-day Moving Average.The big news of the morning was China announcing they may diversify their holdings away from the U.S. Dollar, saying that they will favor stronger currencies over weaker ones...and that the U.S. Dollar is losing its status as the world currency. For China to reduce its massive U.S. Dollar denominated holdings, they must sell off some of their enormous U.S. Dollar based positions, like our Mortgage Bonds...and going forward, they also may not purchase as many of our Mortgage Bonds. The massive demand for our Bonds by the Chinese is one reason rates have stayed relatively low in recent years--so this scenario is not good for Bonds and home loan rates in the long term, and a story I'll continue to keep a close eye on.For now, Bond prices are above important support at the 50-day Moving Average, so I will recommend Cautiously Floating but will watch to see if the Bond breaks below this floor of support.

Market Update

This morning, there are no economic reports scheduled for release. Bonds are lingering near support and the good news is that Bonds do have additional multiple levels of support closely underfoot - starting with the 25-day Moving Average. On the heels of yesterday's recommendation to Lock, we could see a little more price erosion before a likely bounce higher off support. So for this morning, I will cautiously float and watch how the Bond trades. If Bonds break below the 25-day Moving Average, I will change my stance to locking.

Market Update

Mortgage Bonds are trading slightly lower this morning, but continue to remain in a sideways range between a ceiling of resistance and a floor of support. Stocks are also trading lower on more bad news from Citibank. If stocks move lower still, mortgage bonds may benefit. In other news, this week's economic calendar takes a well-deserved rest with mostly low- to mid-level reports scheduled for release. For today, I recommend cautiously floating, while I see how stocks perform.

Market Update

The best Jobs number in six months hit the wires this morning as Non-farm payrolls were reported at 166,000 for the month of October, which was more than double market expectations. Stock prices started to the upside this morning on the robust report, but quickly turned lower due to continued woes in the subprime market as well as a downgrade in the shares of Merrill Lynch, which are helping Bond prices improve. Technically, we are right in between resistance and support, where prices have traded for the past two weeks. As a result, I will recommend to float cautiously.

Market Update

Bonds are rallying this morning, erasing yesterday's losses. The main reason for this rally is that the Stock market is down significantly so far today. In other news, the markets are expecting tomorrow's Jobs Report to show that 80,000 new jobs were created in the month of October. I think the number is going to come in above expectations, and Mortgage Bonds will likely have a negative reaction to it. With Bonds trading near resistance and signs pointing towards an upside surprise in tomorrow's report, it appears prudent to lock ahead of tomorrow's Jobs Report.