Volatility in the market continues as many investors are being forced to re-price their mortgages multiple times per day. In the past week, we've seen rates move from a low of 2.04% on Friday up to a high of 2.25% yesterday. Today we saw rates start at 2.18%, rise to 2.22%, drop to the low for the week of 2.17% and then start back up. All that based upon no economic reports.
The yields today started climbing today after the Treasury sold $21 billion of 10 year notes at a yield of 2.09%, amid weak demand. That represents the highest yield we've seen in months and mortgage rates followed suit. This is the weakest demand we've seen since last August, resulting in the highest yields, we've seen since October. The most plausible explanation is that investors remain convinced the Fed will be slowing their purchases of Treasuries and mortgage backed securities. As demand decreases, yields increase to attract more buyers and the value of the bonds currently held lose more value. To put all this in perspective, we've seen rates rise a half a percent since early May.
What can we expect? With a number of reports coming tomorrow and Friday, the markets will follow those reports but most everything will remain pessimistic - good news will be discounted and bad news will be magnified. Most all the consensus numbers for the reports are very positive so there is good probability that numbers will come in weaker than expected. For rates, expect things to stay in the 4.0%-4.25% range. For now.
In Other News
A German bank employee evidently had too much "fun" the night before and fell asleep mid-transaction the following day. He was to transfer 62.40 euros from one account to another. Just as he hit the "2", he put his head on his keyboard and fell asleep, transferring 222,222,222.22 euros instead ($295 million). As the keyboard pillow became less and less comfortable, he adjusted his head and transferred the 22 million euros a few more times. The bank subsequently fired, not the employee but his supervisor for allowing it to happen. The supervisor filed suit and the courts held that she was wrongfully terminated because it was a mistake, it was caught and corrected and she had already reviewed 811 documents that day.
At least it's not just the US that's sometimes nuts.
Have a good end of the week.
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