gsmls
Registered: 10/09/08
Posts: 4
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Reply with quote | #1 |
If 10yr treasuries, mbs, equities and commodities have all sold off, where has all the money gone?? Offshore?? Shorter term treasuries that I am missing?? Money markets or CD's?? Under a giant mattress??
I have 2 deals that went into contract today, 30 day COE's...don't want to break locks so I haven't locked them yet. Am I overly optimistic to assume that interest rates will fall if/when the markets begin to trade off of fundamentals and economic trends? And, if so, aren't we closer to that now than we were a week ago?
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bryanmcnee
Moderator
Registered: 07/31/08
Posts: 15
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Reply with quote | #2 |
Great questions...for the next two weeks you can throw what you know out the window. The historic fundamentals are suspended for the short term. For example right now (10/0/08 3:57EST) the DOW is down 538 points. You would normally think that due to a flight to quality that the MBS prices would be better. They have gotten a little better from the opening but they are still down -57BPS from yesterday's close.
So what is different? Well first of all the entire global financial system is sputtering and large institutional investors are trying to find the safest bet. MBSs are NOT the safest bet. Treasuries are. We have had 3 new Treasury Auctions today and 4 new ones yesterday. And these are all shorter term auctions. This is drawing funds away from MBSs.
That being said....MBSs are trading off of their best but they are still trading in ranges that give borrowers some great 30 year fixed rates. Keep this in mind...30 year fixed rates should not be below 6! That is not realistic. They should be in the mid sixes to upper sixes based upon current economic data. The two big declines in mortgage rates were fleeting and temporary and only occurred after historic government interventions took place.
Wait for two weeks and then we can start to forecast some very accurate trends for you. Until then we are almost in a day-trading mode. There will be pockets of opportunity here and there and there will be pockets of distress.
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gsmls
Registered: 10/09/08
Posts: 4
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Reply with quote | #3 |
Thanks Bryan...1 more question.
In the reply you said rates should be in the mid 6's if we were pricing off current economic data? For example, in the first half of 2007 rates were in the mid 6's (we're talking 30yr fixed rates) and economic data was better across the board--jobs/manuf/consumer confidence/housing--we're in a recession which, realistically (at least to me) should mean lower interest rates.
I think I get where you are coming from as we are in uncharted territory here, but I would like more detail if possible. Thanks again--waiting for a pocket of opportunity at this point.
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