Bond prices and home loan rates swung wildly all of last week
"AH SUGAR...AH HONEY HONEY" The Archie's made this the top song of 1969, and in fact, it was the only song recorded by a fictional band to ever reach #1. And like a child who has been overloaded on candy, Bonds have been "bouncing off the walls", and appear all "sugared up".
Bond prices and home loan rates swung wildly all of last week. Mortgage Bonds bounced around so dramatically, that home loan rates changed as much as a quarter percent during a single day, on two separate occasions last week. After all the exhausting action, home loan rates worsened by about .25% for the week overall.
Bonds hate inflation because over time, it erodes the purchasing power of the fixed of return they provide. And when consumer inflation was reported at its highest level in years, Bonds were hit hard. But some weak data on both Housing and Manufacturing, along with some sweet comments from the Fed, helped pour some sugar on Bonds as they rallied back and improved.
But wait...just when you thought the party was over, Mr. Excitement, Dallas Fed President and voting FOMC member Richard "Loose Lips" Fisher grabbed the stage. A known inflation hawk, who often blurts market moving comments in an almost uncontrolled fashion, "Loose Lips" lived up to his wild reputation by roiling the Bond market with warnings about inflation and the credit markets.
AND WHILE BONDS MAY BE ACTING SICK FROM TOO MUCH SUGAR, YOU LIKELY KNOW SOMEONE WHO HAS RECENTLY BEEN SHOWING SOME FLU LIKE SYMPTOMS. THIS YEAR'S FLU SEASON IS ONE OF THE WORST EVER. FIND OUT WHY, AND HOW TO BETTER PROTECT YOURSELF IN THIS WEEK'S MORTGAGE MARKET VIEW.