Thursday, December 16, 2010

The Jig Is Up

Michael Dunton, Senior Vice President, Finance at Mt. McKinley Bank, emails:
Today's 30-yr mortgage is now at 5.00%...

The low rate party is over, I’m afraid. Unless Uncle Ben has a secret Swiss account that he’ll fund QE2 with, then I’m afraid the price fixing is over, or put in another way, the price fixing with inflation is about to begin.

Merry Christmas. [Boris Karlov singing the Grinch song playing in the background]
Update: Dunton adds:
Btw—On Nov. 5th it was 3.875%

1 comment:

  1. Even Bill Gross called the top in the 30 year bond market in October. Pimco to begin dabbling in equities beginning Q2 2011 (10% initial exposure):

    Note investment in preferred and bond-hybrids means they don't care about liquidity (though their size probably precludes that anyway). This is a secular shift in the world's largest bond fund--into equities no less! Also makes you wonder what the Fed will be buying one year from now, given Gross' premonitions of Bernanke's asset class preference.

    Rising mtg rates also means less QE Lite and mark-to-mkt losses on Fed MBS holdings. Good thing they report at par.

    My guess is in an FOMC meeting or two, Fed announces it will concentrate purchases farther out in the curve and/or start buying MBS again.