Well it's Friday and TGIF. The benchmark bond has gotten it's proverbial butt kicked since it's near-term high of 103.08 on August 29th. With a rash of fairly decent economic news plus an announcement by President Draghi (president of the European Central Bank), the bond has sold of steadily over that time and is currently sitting at 101.54 - down 154 basis points in the last 9 days of trading. This is equivalent to about 3/8ths in rate. What was 4.25% on August 29th is now 4.625%. To put this in perspective, rates are still great, there's now two ways about it - 4.625% is still VERY low. However, the recent (strong) move sends a message that we are now in our upward trend that we have been anticipating since the Fed decided to end the QE3 program. Only geopolitical unrest and bad economic news have delayed the upward trend in rates but now that both appear to be getting better, the movement upward appears to be on.
Currently, the benchmark bond is oversold according to the relative strength index so we could see a bounce. However, more good economic news could provide us with a reset to where bond traders don't see the market as oversold and then we could be in for a much bigger fall in bond prices sending rates into the 5% range on conventional loans. Because the benchmark bond is oversold I would float with caution but if we get a reset, I would lock quickly.
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