Courtesy Tony Guaraldi
In short it’s been a blood bath in the bond markets, and last week we said our best guess was that there would be additional losses in bonds this week and that came true unfortunately. A look at the 2 year chart of Mortgage Bonds tells the story. With a quick glance you can see that bond prices were at a 2 year high in late September and are now near the 2 year low with the biggest losses coming in the past week and a half.
Such a sharp movement in mortgage rates is in a short period of time is not unprecedented but it is extremely rare, and I can’t remember ever seeing rates move that much in under 2 weeks. At this point we’re hoping the floor at 102.719 holds which is where pricing stopped today. But the concern is the 10 year Treasury yield is still rising again today and that will likely continue to put pressure on mortgage bond pricing. I don’t have any predictions for next week as we’re feeling 50/50 on the direction of rates in the near term so with all the volatility the safe play is to continue to have a locking basis. Continue reading