Yesterday the Fed confirmed their pre-Thanksgiving commitment to buy $500b in Fannie/Freddie bonds to push mortgage bonds. They they’ve hired BlackRock, Goldman Sachs, PIMCO and Wellington to manage the purchases which are set to begin early January. Mortgage bonds have already had another rally on the news. For obvious reasons, investors want to get in
PIMCO
Following the Fed’s announcement last week that they would buy $100b in Fannie and Freddie debt plus buy $500b in Fannie, Freddie, and Ginnie mortgage backed bonds, rates on conforming loans dropped by about .625%. If a borrower with 720 credit and a 20% down payment were looking at rates today, a 30yr fixed rate
Fixed and ARM rates for loans up to $729k are down .375% this week rebounding from a spike last week. Rates on loans above $729k are consistent because they continue to be priced more on lenders’ willingness to lend than on market forces. Rates got a boost early this week when it was reported that
President Bush signed the bailout bill shortly after it was passed by the House today (it passed the Senate yesterday). Below is Treasury Secretary Henry Paulson’s statement today on the bailout bill. Feels Palin-like in its generalized tone, but that’s because he’s already doing the real work behind the scenes. Under the bill, Treasury has
Markets are even in the hour following the House’s 263-171 approval of the Treasury’s $700b financial sector bailout package, and it passed the Senate yesterday. Now it goes to the White House and President Bush has already said that he would sign it into law. It’s widely expected that Treasury can start purchasing illiquid assets
In an interview with CNBC today, PIMCO chief Bill Gross covered a broad array of economic topics, most notably saying that “no one really knows—the banks, Fannie or Freddie, the Treasury, the Fed, PIMCO—no one really knows where the bottom is for housing.” He said that as prices keep going down it perpetuates a cycle
In his August 2008 Investment Outlook bond king Bill Gross points out that despite Fed Funds being lowered by 3.25% since last September, yields on agency mortgage backed securities are actually higher (see chart). We’ve discussed this repeatedly on this site, noting that after each of the cuts that was made since September, mortgage rates
Economists and journalists love to label. They use words like “growth” and “value” when describing aggressive and conservative styles of investing. And they use phrases like “soft landing” and “bursting bubble” when describing normal or extreme outcomes of the current housing slowdown. Labeling can help simplify complex issues like investing and housing, but it’s also
Rates/Commentary, week of May 23, 2005. Rates are holding to lows from last week. This week’s data includes Fed meeting minutes Tuesday, which will give us a follow up on last week’s inflation data; existing and new home sales Tuesday and Wednesday; and personal income and spending Friday. Should be no surprise from the record