Bonds have been trading in a clear, long-term Rising Wedge, after the steep decline in late 2010. In many cases - the Bond will continue to rise over time right into this apex - meaning that rates could end up lower in the weeks ahead - but potentially not without volatility.
Which way will Bonds break out of this Rising Wedge is the $64,000 question that will be answered in the weeks ahead. We could see a continuation higher out of this trend - which could mean even lower rates.
A lot will depend on Europe and Friday's Jobs Report - which will then influence what the Fed does at the next Fed Meeting on June 20th. Will there be more QE and if so, how will the Bond perceive it? If the Bond reacts negatively like it has on past official QE announcements - then the next couple of weeks leading into the June 20th Meeting will really present a wonderful opportunity to line up your clients to get a mortgage as Mortgage Bonds creep towards this apex. This is a technical and fundamental opportunity for rates that won't last forever - help clients see this. One thing we know for sure - when prices break to the downside out of a Rising Wedge - the price action to the downside is typically very fast - like people exiting a building when someone yells "fire".
