MBS selloff picking up steam post FOMC, meaning rates are rising this afternoon.
Operation Twist
Rates started the day up, but have since dropped. Here's why.
Rates rose .25% last week as mortgage bonds sold 4 of 5 days on (weak but) better than expected economic data. Rates rise when bonds sell, and rates have now risen to lose the entire dip that came after the Fed’s September 21 commitment to keep rates low. This rate rise comes as headlines scream
Rates held under 4% again last week. The link shows how rates closed Friday in the three mortgage price tiers: loans to $417k, to $625k, and to $2m. But rates change in real time. Example: they rose and fell .25% last week as Eurozone optimism did the same and U.S. home prices, jobless claims, and
Since 2008, I’ve tracked the Fed’s quantitative easing closely because it directly impacts rate markets and my client advice daily. Today I got an inquiry from a student trying to fact check QE dates for a term paper. I gave her the dates and link below (to a timeline and rate chart), and she asked
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
The myth that the Fed still had lot of tools to deploy to help an ailing economy suffered a setback this week when it announced Operation Twist. The idea that moving from short term debt to long term debt while not increasing the size of its balance sheet is somehow “stimulative” is comical. I suppose
Rates were down .25% last week—dropping below 4%—on a surprise Fed announcement that they’d buy mortgage bonds to support housing. Below is a recap of last week and a preview of next week to see if rate lows will hold. How Rates Dropped Below 4% Markets got the expected Operation Twist announcement Wednesday—a Fed plan
Mortgage traders are drowning in volatility, and it’s not because of Operation Twist. The surprise earlier this week is that the Fed will also start reinvesting maturing cash flows from existing mortgage holdings back into mortgage bonds (it was buying Treasuries) to support housing. Stocks were hit on the FOMC’s gloomy economic outlook and bonds
Mortgage traders are drowning in volatility, and it’s not because of Operation Twist. The surprise earlier this week is that the Fed will also start reinvesting maturing cash flows from existing mortgage holdings back into mortgage bonds (it was buying Treasuries) to support housing. Stocks were hit on the FOMC’s gloomy economic outlook and bonds
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. I explained the Fed’s plans in simple terms. I also said that the rally was extreme, and might not hold
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. I explained the Fed’s plans in simple terms. I also said that the rally was extreme, and might not hold
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 Leading Economic Indicators LEI for August was +0.3%. This is a statistic calculated from other data and the low reading is the
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. Below is an explanation of each strategy in simple terms. Operation Twist is a Fed strategy where they shift their debt holdings to longer-term securities. Between now and
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. Below I cover how Europe affects U.S. rates, recap rates last week and
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