The Mortgage Man

Get more out of your mortgage experience!

Friday June 13, 2008

The bond market is showing some indications of a rally.

Early trading efforts this morning are reflecting a possible bullish move higher.  The Consumer Price Index (CPI) for May was released with a slightly better than expected 0.6% vs. the 0.5% that economists were expecting.  The increase in costs to the consumer combined with the release of the Consumer Sentiment report well below expectations is simply repeating what we already know about weakness in the economy as a whole.

These 2 reports are seen as bad for the economy and bad for stocks.  And as you know (as a reader of this blog), what is generally bad for stocks is good for bonds, and mortgages in general.  This is by no means a strong rally, nor is it enough to offset the major sell off earlier this week.  But, it could be a sign of an upward correction.

This goes against the logic of yesterday’s post, but in this market, there is a lot of volatility that defies conventional wisdom.  The best I can say for today is cautiously watch the market for signs of whether or not to lock your rate.  If there is any kind of downward movement later in the day, I would recommend locking to protect your current rate.

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