Not even bullish economic news can hold up stocks as valuation concerns creep into the market. Stocks started on the plus side but have since dropped like a rock, down 180 points on the big board as we speak. Notes, bonds, and mortgage backs were near unchanged when we started the day but have gained traction as equities take their beating.
The feel and look is much the same as yesterday with the 10 year note up 11/32’s (3.36%) and MBS up 4/32’s. Not huge but anything “green on the screen” is good for us Austin mortgage types. Chart patterns are also in our favor as the 10 year note just took out the old high (low yield) from the 18thof August, making today’s, day ending close very important. “If” we can close below 3.35%, the market will have “broken out” to the upside, a very bullish formation. This would turn daily studies bullish along with trend intensity. That occurrence would then project the next target to be 3.09% on the 10 year note. I would advise you to be very careful. Any turn around (stock rally) will push yields higher and worsen Austin mortgage pricing, forming what we call a “false breakout”.
With short term oscillators very overbought, a correction or at least a pause seems a high probability. Keep an eye on stocks, they’re leading bonds around by the nose.