Minus 127 basis points that is.
Minus 127 for mortgage bonds today. It sure has been some time since I've seen a print like that for the mortgage bond market for the day's trading action.
Things were going along fine until the Federal Reserve's press release after their two-day meeting. Then, this (see chart below):
Remember, red is bad (it means higher mortgage rates). Green is good (lower mortgage rates).
Since the beginning of May mortgage bonds have lost 600 basis points.
Mortgage rates have now moved almost a full point higher.
Where do we go from here? Well, a move higher that retraces a third or half of the move down from early May is reasonable but I do not expect any further gains in prices for mortgage bonds from there.
The die seems cast for an upwardly trending mortgage rate market for the foreseeable future.
I expect this fact to take time to settle in for people as we've been spoiled by 11 years of mortgage rates moving lower and then hitting record lows. Time to change the mentality on such things.
Brett
www.BrettGrendahl.com
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