Your friend the 10 year

[SD Realtor]

I was not really looking for anything, just kind of posting about it because I monitor the 10 year in a big way. I very much agree with your analysis PR. Over the past several weeks we have seen a flight to “safety” more then anything else due to projected recessionary effects including lower yields on all “safe saving vehicles”.

My read on treasuries is that they will bounce around for awhile and I do not see them “running away” while we are mired in the recession for the next year or two. I would agree with your longer term analysis but I don’t think it kicks in for another 1-2 years minimum.

If unemployment kicks in hard then that longer term may kick out even longer.

*************

XBOX –

“Given the unattractiveness of mortgages to most investors now (the US Govt. not included) what would happen to mortgage rates if 10yrs went to 5%, what about 10yrs at 6% or even more? ”

If that occurs, then with the current spreads you would see mortgage rates at 8.5% for a conforming 30 year fixed rate mortgage.

Boom…. Outta here…

“Is it safe to assume that mortgages (30yr fixed) will stay at rates at least a couple percent above 10years? ”

The “back of the napkin” spread between the 10 year and a standard 30 year fixed rate conforming mortgage used to be about 1.25%. Now it is about double that.

“How will we have a housing recover if mortgage rates go up?”

We will not but read on.

“If rates do go up, will the government still be able to pursue all these bailouts?”

It is not if but when… again read on as our government never says give up, just print more money and keep screwing the taxpayers.

“Could the fed start buying 10yrs to drive down long term rates?”

Indirectly they do that today but it is a losing battle. The primary dealers are being forced to buy more and more treasuries to finance our debt load as foreign buyers are slowly racheting down. The primary dealers get to go to the ever widening windows provided by the FED to get money to buy the treasuries. Isn’t that neat?

“If so, wouldn’t they have to print money to do that, causing more problems?”

XBOX I think you are answering your own questions.

*********

Getting back to your other question about how we deal with the lending environment for homes if rates rise dramatically. As we now know, our government has taken a “we are going to go down with the ship” approach regarding housing. It will not surprise me to see aeother a nationalized approach to lending or substantial subsidization for potential buyers provided directly by the government or backstopped by the government via some BS institution that the government will create.

Does that mean housing prices will not drop? No not at all. They will drop.

XBoxBoy

[XBoxBoy]

[quote=SD Realtor]Ten year sell off has been non trivial. Over 50 basis points in 5 business days.[/quote]

And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy

[XBoxBoy]

[quote=SD Realtor]Ten year sell off has been non trivial. Over 50 basis points in 5 business days.[/quote]

And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy

[XBoxBoy]

[quote=SD Realtor]Ten year sell off has been non trivial. Over 50 basis points in 5 business days.[/quote]

And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy

[XBoxBoy]

[quote=SD Realtor]Ten year sell off has been non trivial. Over 50 basis points in 5 business days.[/quote]

And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy

[XBoxBoy]

[quote=SD Realtor]Ten year sell off has been non trivial. Over 50 basis points in 5 business days.[/quote]

And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy

[SD Realtor]

Xbox I know! Today was another drop in the yield. Looks like the recession fears have chased equity holders back into the bond market, or anyone with cash into the bond market.

Just a guess by me.

[SD Realtor]

Xbox I know! Today was another drop in the yield. Looks like the recession fears have chased equity holders back into the bond market, or anyone with cash into the bond market.

Just a guess by me.

[SD Realtor]

Xbox I know! Today was another drop in the yield. Looks like the recession fears have chased equity holders back into the bond market, or anyone with cash into the bond market.

Just a guess by me.

[SD Realtor]

Xbox I know! Today was another drop in the yield. Looks like the recession fears have chased equity holders back into the bond market, or anyone with cash into the bond market.

Just a guess by me.

[SD Realtor]

Xbox I know! Today was another drop in the yield. Looks like the recession fears have chased equity holders back into the bond market, or anyone with cash into the bond market.

Just a guess by me.

[DWCAP]

[quote=XBoxBoy]
And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy[/quote]

The bully pulpet. Did you read about how the fed “infused” capital into the banking system? Wells Fargo wanted nothing to do with it. They are a healthy bank (in todays company) and didnt want the government handout, cause they didnt need it. Same as they didnt need gov support to buy Wachovia. You would think the GOV would be happy about this, giving taxpayer “capital” only to the banks that really need it, and rewarding the healthy banks who had good lending practices/managment. NOPE. The CEO’s were held there for hours and hours until they all signed on. If they had held out longer, they would have been kept there longer. That isnt negotiation.
Check treasury and FED phone records. I am sure they are on the phone every time reality starts to hit the treasury market. These are powerful people with powerful friends, you dont get to just say no.

[DWCAP]

[quote=XBoxBoy]
And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy[/quote]

The bully pulpet. Did you read about how the fed “infused” capital into the banking system? Wells Fargo wanted nothing to do with it. They are a healthy bank (in todays company) and didnt want the government handout, cause they didnt need it. Same as they didnt need gov support to buy Wachovia. You would think the GOV would be happy about this, giving taxpayer “capital” only to the banks that really need it, and rewarding the healthy banks who had good lending practices/managment. NOPE. The CEO’s were held there for hours and hours until they all signed on. If they had held out longer, they would have been kept there longer. That isnt negotiation.
Check treasury and FED phone records. I am sure they are on the phone every time reality starts to hit the treasury market. These are powerful people with powerful friends, you dont get to just say no.

[DWCAP]

[quote=XBoxBoy]
And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy[/quote]

The bully pulpet. Did you read about how the fed “infused” capital into the banking system? Wells Fargo wanted nothing to do with it. They are a healthy bank (in todays company) and didnt want the government handout, cause they didnt need it. Same as they didnt need gov support to buy Wachovia. You would think the GOV would be happy about this, giving taxpayer “capital” only to the banks that really need it, and rewarding the healthy banks who had good lending practices/managment. NOPE. The CEO’s were held there for hours and hours until they all signed on. If they had held out longer, they would have been kept there longer. That isnt negotiation.
Check treasury and FED phone records. I am sure they are on the phone every time reality starts to hit the treasury market. These are powerful people with powerful friends, you dont get to just say no.

[DWCAP]

[quote=XBoxBoy]
And now a week later, and it seems almost all of the sell off has been recooped.

I’m finding the 10yr action particularly odd since by most accounts the “crisis” is easing so we should no longer be seeing a mass buying of treasuries as a flight to safety measure. Any of you savvy investor types have a good explanation of why 10yrs are being scooped up? Is China or Japan suddenly adding large quantities of 10yrs to their reserves? If so why?

Isn’t it expected that in the near future the US will be issuing large quantities of debt, thus the supply of treasuries will flood demand? Wouldn’t that mean lower treasury prices? (and higher yields)

What am I missing here?

XBoxBoy[/quote]

The bully pulpet. Did you read about how the fed “infused” capital into the banking system? Wells Fargo wanted nothing to do with it. They are a healthy bank (in todays company) and didnt want the government handout, cause they didnt need it. Same as they didnt need gov support to buy Wachovia. You would think the GOV would be happy about this, giving taxpayer “capital” only to the banks that really need it, and rewarding the healthy banks who had good lending practices/managment. NOPE. The CEO’s were held there for hours and hours until they all signed on. If they had held out longer, they would have been kept there longer. That isnt negotiation.
Check treasury and FED phone records. I am sure they are on the phone every time reality starts to hit the treasury market. These are powerful people with powerful friends, you dont get to just say no.

[Author]

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