Lock Now

Consumer Confidence for April was reported at 57.2, well below expectations of 61 and the lowest reading in 16 years.  Within the report, consumer inflation expectations are at an all-time high, meaning that consumers are seeing inflation as a real threat.  This inflationary concern within the Consumer Confidence Report is pushing Mortgage Bonds lower.

New Home Sales for April were reported at 526,000, just a shade above expectations of 520,000.  The inventory of unsold new homes fell slightly to a 10.6 month level from last month's 11.1 reading.  This mildly positive report has given Stocks a boost and even more selling pressure on Mortgage Bonds.

U.S. single-family homes showed a price decline of 14.1% at the end of the first quarter from a year earlier, according to the Standard & Poor's/Case Shiller national home price index reported on Tuesday.  The S&P/Case Shiller composite index of 20 metropolitan areas fell 2.2% in March from February and dropped 14.4% from March 2007. 

There are inflation concerns abroad as the European Central Bank, ECB has reported their annual rate of inflation at 3.6%, the fastest pace in almost 16 years.  June 1st will mark the 10th anniversary of the ECB and in each of the last 8 years it has failed to bring inflation under an ideal target of 2%.  This is very interesting and makes you appreciate the tough job the Fed has in maintaining price stability.  If you think as a global bond investor, Bond yields across the globe, may rise further to offset the rise of inflation.

Bonds have drifted well below a layer of resistance at the 25, 50 and 100-day Moving Averages.  It now appears as though prices are destined to test support at the 200-day MA, about 60bp beneath present levels.  I maintain a locking bias.