The Mortgage Update

The only thing we know for certain is that investors still don’t know how to react to the Fed’s press conference last week. The market opened down significantly from where we priced, but we were able to make up most of the loss over the course of the day. But something strange is happening this morning…there is a rally in the bond market. Investors sought safer assets amid speculation a credit squeeze in China will slow growth in the world’s second-largest economy.

The Mortgage Update

Bonds slumped globally over the weekend. Benchmark notes dropped for a 6th straight day as Ben Bernanke claimed QE may begin to tapper bond purchases this year and end it in mid-2014. Volatility remains the name of the game this week. The Bond Market still lacks confidence and any piece of news or data has the potential to move the market. The first big piece of economic news is Tuesday with Durable Goods Orders and Consumer Confidence. It was another wild night with the market significantly from where we priced on Friday. It’s going to be a wild ride today, buckle up…

The Mortgage Update

All should be quiet on the home front with no economic data scheduled to be released. It will be an opportunity to reevaluate what has happened over this past week. Most economists believe the market has over reacted to the Fed’s announcement. However, this could add volatility to the market over the next few weeks as investors return to the MBS market. We could enjoy a stable day today, so let’s take advantage of it.

The Mortgage Update

Annihilated. The Fed has spoken and it wasn’t pretty. Bonds and Treasuries tumbled around the world following Big Ben’s press conference. The MBS market was sent into a tailspin losing over a point causing multiple re-prices late into the evening. The 30-year MBS best execution rate has risen to 4.25%, a rate not seen since 2011. We could rebound today or tumble more. Policy makers expect the jobless rate has fallen to 7.2 percent, down .1 percent from March. Hold on to your hats this could get exciting.

The Mortgage Update

Treasuries are little changed before Bernanke & Co speak at 2 PM after the central bank ends a two-day meeting. The Fed’s scripts is already out the question is--will they stick to it. Investors are waiting for any indication that the central bank will slow the pace of bond purchases. Especially, after reports showed inflation stayed below the Fed’s target and housing starts trailed the economist forecasts. The market could move significantly in either direction we just don’t know which one yet…

The Mortgage Update

MBS lost ground late yesterday as the market reacted to a Financial Times article claiming the Fed may end asset purchases sooner than later. Tapering is the word of the day as the Federal Reserve starts their two-day policy meeting today. Investors are looking for signals that the central bank will begin to slow bond purchases. Housing Starts will be reported today and a possible predictor for the Fed’s announcement tomorrow. Anything could happen today we just need to wait and listen…tapering.

The Mortgage Update

Late Friday afternoon bond markets began taking chips
off the table ahead of this week’s FOMC events. This is
the week we have all been waiting for, the central bank
starts a two day meeting tomorrow. 10-year yields fell
from a 14-month high last week amid skepticism policy
makers are moving toward reducing bond buying. The
recent rise in yields suggests the market is nervous
that the Fed will soon reduce stimulus. Hopefully,
Bernanke will calm the market down and reaffirm their
monetary policy. Maybe that is just wishful thinking on a
Monday morning.