Stocks are trading higher, led by strength in Countrywide and Microsoft. The flow of money into Stocks is due to Bonds being sold. Countrywide will be holding a conference call so the markets will hear more about what Countrywide sees in the future This will be interesting to hear Countrywide's outlook for the mortgage business in general.
Technically, Mortgage Bonds are showing signs of topping out at long-term resistance after reaching a level of previous market peaks over the past couple of days. But for the moment, prices are attempting to hold at support levels. Should Stocks continue to move higher, it may wear on Bonds and push them below this level of support.
Looking ahead, we are expecting a Fed rate cut next Wednesday. Like we saw last month as well as many times in the past, a Fed rate cut initially helped Bonds, but eventually rates worsened before settling down. We would like to be patient and float until the Fed Meeting next Wednesday, but should prices drift any lower, we will quickly switch to a locking position and keep any of recent gains.
Again, my best wishes go to the tens of thousands displaced families during these long and stressful periods due to the California fires. Also, that the firefighters, who have been noted by reporters as determined but weary, continue to be effective and they return uninjured.
If there is any new breaking news over the weekend we will bring it to you in new report.
Thank you for listening and we will have another report for you Monday.
Roger Herrick
California Mortgage Broker
www.ContactHerrick.com
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