A Look Around the Markets

Let's take a moment to review a couple of the news items that are capturing my attention.

The count of mortgage lenders that have closed shop this year now stands at 142.  CIT Group was the biggest name casualty of the day.

The meeting minutes of the most recent Federal Reserve Open Market Committee, released today, showed that the Fed is still mostly concerned about inflation.  This put a damper on the mood of the equity markets.  The Treasury bond markets actually responded quite bullishly.

We face risks of stagflation.  Stagflation is a time where we see inflation with slowing economic growth, rising unemployment, and recession.

What is most interesting is that mortgage bonds ended the day only up 6 basis points (one basis point equals 1%) while the 10-Year Treasury ended up 53 basis points!  This is a perfect example of how using the Treasury bond market as a gauge on what's happening to mortgage rates is not a sound decision.  Mortgage rates are directly determined by how mortgage bonds trade, and highlighted by recent events, the market's appetite to purchase these bonds.

I have watched the mortgage marketplace go through some dramatic changes these past ten years.  As always, I remain your counselor, seeking to guide you through the pitfalls ahead.  If you want me to address something specifically, just email me at brettg (at) tidalwavecapital.com.

This cartoon tells a lot: