Bond Market Comment

Helping Mortgage Bonds this morning was more good news on the inflation front. The Consumer Price Index came in lower than expected and the year-over-year reading was at its lowest level since 1950. These are good signs that inflation hasn’t become an issue yet. However, many experts expect the inflation concern to rise in the future.

Currently, Mortgage Bonds are testing a tough ceiling of resistance of their own at the 25-Day Moving Average. I recommend floating for now. But be prepared to lock in these gains if the situation changes, since this window of improved pricing may not last very long. I will keep you posted.

Leonard Winslow