[quote=Chris Scoreboard Johnston]After the largest single day upmove in price in history, the rates out to be a helluva lot lower tomorrow, 8 full points in 15 minutes. For those of you who do not trade what happened today is impossible to overexaggerate how big of a move that is, beyond belief. In the old days the daily maximum limit used to be 2 points and was rarely ever hit. 8 points in a year would be a great year trading bonds, 15 minutes is insane.
Lenders might be in shock and may wait to see if that sticks, they did settle down some off the highs.[/quote]
Chris, I’m sure you saw the Bloomberg article (Mon) about the UK Govt gild purchases lowering mortgage rates and how that may give ammo to Feds here to do the same thing. My question, besides how stupid I was not to trade, is why did bond traders not anticipate it even a little bit? I mean it was front and center on website, or do traders ignore musings of lowly reporters?
The should be lower, but 10 year was under 2.1% in Dec, but mortgage rates didn’t go below 4.5%, so why should they go lower than Dec rate? Because Fed pumping into Fannie/Freddie?
There will be a tidal wave of refi’s today and the next month. Banks have so much business, they do not need to lower rates all the way down to match requisite T-bond drop. I have seen this over the last few months. As soon as there was a huge drop, refis skyrocketed for a day and then banks jacked up rates for what appeared to be supply/demand issues, not market rates. There will such backlog from underwriters and such that typical 30 day lock periods will expire. Stay with reputable lenders who will anticipate this problem.
