Florida Mortgage Rates – Evening Report

by Florida's #1 Mortgage Planner on October 7, 2008

Locking Stance:  LOCKING     Mortgage Bonds:  -19bp

Mortgage bonds ended the day down 19 basis points despite stocks sliding from their gains and falling another 500 points.  With that kind of a slide, normally bonds would be in a rally mode.  So, what gives?

Emotions, uncertainty, fear, you name it.  We are not in a normal trading environment to say the least.  80% of Americans surveyed say that the financial crisis is creating more stress in their lives.  I say, turn off the stupid TV if you cannot keep your emotions out of it.

The Fed tried to appease the markets by taking on commercial paper now, adding the Commercial Paper Funding Facility (CPFF) to its mix of “liquidity” additions.  The Reserve Bank of Australia did an emergency cut of 1.00% to their equivalent of our Fed Funds Rate.  The Bank of England, as well as the European Central Bank, along with our own Federal Reserve, are all also expected to follow suit in another effort to “save the markets.”

The problem is this, however.  How do you get irrational thinking traders to become rational in their trading and return to fundamentals instead of trading based on fears?  If the Feds could make that happen, maybe we could all get on with our lives.

As the market closed, mortgage bonds still sit above their 25-day moving average and remain capable of rallying to at least test recent highs.  Once again, I reiterate that in this environment, caution must remain as emotions rule the markets, hence the locking stance.

Leave a Comment

Previous post:

Next post: