10 yr testing the support

[SD Realtor]

Wowsers I think the 10 year touched 4.5 today… Crazy stuff man. Given the difficult lending environment it will be quite a sight to see once the yield grows if the bond market slows down. Pretty much testing the lows achieved in December if I am not mistaken.

[mgubnyc1]

Since the mortgage rates are somehow tied to the this 10yr bond why haven’t the rates come down?

[(former)FormerSanDiegan]

Since the mortgage rates are somehow tied to the this 10yr bond why haven’t the rates come down?

Risk Premium

[cr]

I read somewhere today that the FF rate is higher than the other major rates, and the conclusion was that they are sending a message to the FED come their meeting 2 weeks from now.

I still think Helicopter boy is stuck: he lowers the rate inflation goes up, he raises or even leaves it, the bulls will flee, market dives, and housing, well housing is screwed either way.

Will he stick to his Anti-inflation shtick, or will he fold to political pressure?

These days I don’t think anyone knows.

[waiting hawk]

“Will he stick to his Anti-inflation shtick, or will he fold to political pressure?
These days I don’t think anyone knows.”

Let me give you a Jim Cramer booyaahh for that one. Spot on!

[pepsi]

There is no way that inflation will come down anytime soon. Just talked to our China supplier and guess what,  since Jun, the price has gone up 10% for the exact same item. This is mainly caused by the exchange rate and the labor cost over there.   China does not make the high end stuff that North America (i.e Canada) makes, but they cover a lot of low end merchandise in Wal Mart.

 And I think those low end stuff collectively have a lot of weight  in our CPI.

[SD Realtor]

That was the exact point of my post. That even with the low 10 yr yield, mortgage rates are not as low as they were at this time last year when the 10 year bottomed at this level. Conforming are pretty close but other loan programs are not. The premium for moving mortgages on the secondary market is definitely the culprit. The fact that the 10 year has come down is what has kept mortgage rates where they are. If the secondary market remains this tight when the 10 year yield does reverse trend and goes up then we will see a more restrictive environment to say the least.

SD Realtor

ps = helicopter boy is in a tight spot… my wish is that he doesn’t touch the rate. However I give it a 75% chance that he will bow to pressure and knock it down at least 25 bp. I REALLY hope I am wrong.

[HereWeGo]

75 bps seems more likely, given the current yield on the 91-day.

[SD Realtor]

75 bp in one swoop! hohoho… I guess stranger things have happened.

SD Realtor

[cr]

No doubt whatever political nonsenscial jargon Helicopter boy says tomorrow will be analyzed ad nauseum.

As far as inflation, I’m in imports too. There’s a little thing called VAT that I am really surprised has not made more headlines. In one fell swoop it raised prices on thousands of China commodities anywhere from 2-8%, overnight! Rumor is that may happen again at another 3-5%.

Then there’s the currency, which every single day appreciates to the dollar. Today it’s 7.56:1, a year ago it was 7.92:1. Rumor there is it will go to 7.3:1 by the end of the year. Labor costs are rising as a result, and so are material costs.

Of course we only need to worry about “core” inflation, because food and energy costs haven’t gone up 20% this year either.

[HereWeGo]

We’ll see. I can’t see the Fed allowing the difference between Treasury yields and the FFR to be so large.

[donaldduckmoore]

If the FED thinks inflation is still a concern, they should not lower the rate. And I don’t think they should lower the rate. Lowering the rate may cool down the market temporarily, but the dollar hurts, inflation goes up. More damaging effects than expected. Besides, they have to raise the rate later again and that will cause psychological turmoil in Wall Street again. Lowering the rate is not an option. It is just some loser like Cramer who is yelling to keep the rate low in order to save his ass.

[bsrsharma]

I can't see the Fed allowing the difference between Treasury yields and the FFR to be so large.

Can you please explain why? Let us say it is 5% (a random figure). Whom does it hurt (and who benefits)?

[mgubnyc1]

Is it possible that if the fed does lower the rate 1%, mortgage rates won’t be any lower. I always thought that mortgage rates were tied to the 10yr bond

[Anonymous]

Recently, the yield on the 10-yr has been going down, but mortgage rates are still going up. So, mortgage rates might not be affected at all if the Fed lowers rates.

[Author]

Posts