Fixed-income traders report that trading in this environment is growing increasingly difficult. “We’re approaching levels that suggest the worst is built in.” The MBA reported that mortgage applications fell 4.3% last week in spite of the great rates. Banks are afraid to lend, to put it simply. Volatility picked up a little Monday afternoon when [...]

Personal Income & Spending -Personal Income, Month/Month: -0.1% -Consumer Spending, Month/Month: 0.2% -Core PCE price index, Month/Month: 0.1% -Core PCE price index, Year/Year: 1.6% -These data and the graphs below are stark. With less money coming in and less money to spend the consumer cannot drive economic growth.

Remember QE1 from January 2009 through March 2010? The Fed bought $1.25 trillion in mortgage bonds during that time. So now they collect money when loans payoff on refis and also when borrowers make their payments. And last week the Fed said they’d use this money to buy more mortgage bonds starting October 3. This [...]

Yesterday rates set new record lows after the Fed’s rate policy statement. Investors piled into mortgage and Treasury bonds/notes after the Fed surprised markets by saying they’d buy more mortgage bonds (MBS) starting October 3.

Initial Jobless Claims -423,000 for the week ending September 17 -Down 5,000 from previous week’s revised 432,000 (was 428k) -4-week Moving Average 419,500, up 500 from previous week -Slight improvement but still weak

Rates again hit record lows today as investors piled into mortgage and Treasury bonds/notes after the Fed confirmed Operation Twist and said they’d buy more mortgage bonds.

Rates were up .125% last week, rising off record lows touched briefly the week before. Is this the start of a rising trend? Unlikely given weak U.S. economic fundamentals, but volatility will continue as markets reconcile U.S. data with Europe’s debt crisis.

Today’s Originations links are dedicated to explaining the Fed’s Operation Twist. TheBasisPoint’s link focuses on mortgage rate impacts.

-Bernanke’s Invisible Bazooka Ploy (Mish) -Why Aren’t There Urinals In Houses (Weakonomist) -US Banks Seek Relief On Swelling Deposits (Bloomberg) -Mortgage Solution Rooted In Tobacco Settlement (TheStreet) -Does Bank of America’s Stock Price Matter? (CNBC’s John Carney)

Below is a link to Bernanke’s full Jackson Hole speech today along with underlined emphasis from CreditWritedowns. Bernanke didn’t expand on monetary policy nor explicit QE3 clues beyond what was already provided in the August 9 FOMC statement. He said that those topics would be explored more deeply at the next FOMC September 20-21.