Could This Be The Beginning of The End of Low Mortgage Rates?
Bond markets hit record highs today only to be driven down hard on the heels of Federal Reserve Chairman Ben Bernanke’s speech at the Annual Fed conference in Jackson Hole Wyoming.
I have been warning that the bond markets are overbought and that a reversal was inevitable and it happened today. The 10 Year Note lost a staggering 141 basis point’s and the Fannie Mae 3.50% Coupon lost 59 basis points before it was all over.
Congratulations to all that heeded my warnings and locked into a mortgage rate. It feels good to walk away from the craps table a winner. Doesn’t it?
We will have to wait for next week to see where we go from here. While there is no clear technical signal, it does show how Bond prices are range bound as the market hit both resistance and support today.
Big Ben Speaks at Jackson Hole
Mr. Bernanke stated that it is reasonable to expect growth to pick up in 2011 and in the years that follow. He went on to say that the Fed is supporting the economic recovery by maintaining extraordinary accommodative monetary policy. “The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly” Bernanke told the Fed conference, held in Jackson Hole, Wyoming.
Also helping to push bond prices down and mortgage rates up were comments by Fed member James Bullard stating that the Fed has done all it can in the Mortgage Bond Market.
For many years I have watched the Fed get it wrong time and time again and it’s usually at the behest of what ever administration is in the White House at the time. It’s no different this time either. It is very clear that the Fed is playing a very dangerous shell game to keep the markets from collapsing long enough to get through this next election cycle. There are a multitude of economists that are ringing the bell of concern and calling for the Fed and our elected officials to reverse their course of action and stop the out of control spending, which has not accomplished what they promised. Many are now calling for the White House to fire their Economic advisors. The Fed’s actions speak louder than their words.
I maintain a bias towards locking into mortgage rates.
Fannie Mae 3.50% Coupon $100.28 -59 BP
* Maximum Loan to Value of 80% with a Maximum loan amount of $729,000.