It is all about the Federal Reserve (The Fed). Janet Yellen, The Fed Chairwoman, clarified some policy thinking on Thursday and intimated that the domestic economy is good, that employment is trending in the right direction, and that short term interest rates could very likely go up by the end of 2015. This hurt U.S. bonds through rising yields and energized the U.S. stock market which traded positively on the news out of the Fed.

There were several moderately impactful economic reports this week, namely, 2nd quarter Gross Domestic Product and Consumer Sentiment. Both reports came in better than expected. These positive reports have added additional pressure on rising bond yields.

Technically, mortgage bonds were unable to break through certain resistance bands this week which suggest yields could continue to move higher. We are biased toward locking in loans.