Thursday, October 23, 2008

Rate Watch 10/23/08: Floating

This morning Bond prices were bouncing around as Stocks traded within a 552 point swing. My recommendation this morning was to Float and by 2:41 MST I called for an alert to lock with the Bond market worse by 38 basis points since rate sheets came out.

We are seeing a Bearish Morning Star Pattern forming in the Bond Charts and Volatility in the Bond market has returned after several really good, somewhat predictable, days in the Stock and Bond Market. The Floor of support is the 200 day moving average, which as you might remember, I was VERY excited about breaking through on the way up in Bond Prices.

We ended the day at 101.41, right at the 200 day moving average of 101.42. We had a 38 point loss in the Bond Market today and Bonds will be hoping for more bond friendly news like we got today to help: Jobless claims were higher, highest in 5 years and jobs lost in the Securities Industry with Goldman Sachs announcing 2300 layoffs today not at a total of 125,000 jobs lost.

Most money now being created with Stock selling is being parked in US Treasuries, rather than Mortgage Backed Securities. The recent boost we received in Bond prices was because PIMCO, the largest MBS investor in the world, renewed their interest in MBS for the past two days. They still have this interest in MBS, so I am not too concerned that the Bond prices will suffer, but there are some technical head winds ahead and I will watch closely and advise you of the direction of rates.

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