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Another Record: Treasury-Mortgage Spread Just Took Out 60 bps Support
The 10 Year Treasury To Mortgage spread just broke the 60 bps barrier, and is now trading at a record tight 59.61 bps, after dropping as low as 58 bps earlier. Is the Fed now launching a short squeeze in MBS as well? Pretty soon Mortgages will be trading at negative rates, when the Fed realizes that the only way to get house prices higher is to pay Americans to take out a mortgage.
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SRS is feelin the pain...
Gotta get everyone out by April 30 to spend those ObamaBux. Anyone think this administration has a plan that goes past this spring?
They are posting flyers all around D.C. for a huge healthcare rally in june. So yes, they are planning that. Interesting to see that this push in march is all facade.
Wait... How can we afford more gov't run health-care? I thought we were broke as-is.
Monster sized musical chairs bitches. Just make sure you don't sit down on a stiff hard one when the music stops!
Why would anyone "invest" in these government manipulated markets?
There are no more "investors", only traders... or is it "traitors"?
Thank you for stating the obvious!
And they have accomplished this between the expiration of QE1 and in the face of the expiration of continued MBS purchases in 3 weeks...amazing! I completely underestimated the power of the PPT to orchestrate such a lopsided win by the home team.
Larry Summers is chewing on a cigar right now in a meeting with Ben Bernanke saying; "I love it when a plan comes together."
Just when you thought it couldn't get any more Bizzare. Hell - I am about to come around to the idea that this time IS Different - and we can be trading DOW 30,000 with 15% Unemployment and an Insolvent Banking System.
i know you are likely being sarcastic, but it is NEVER different. NEVER. there are variations naturally, but this has all happened before.
the variation we have this time is a major banking crises (similar to Great Depress.) that is more global and interconnected than in the 30s. this is combined with historical debt levels on the corp and consumer side and historically high levels of federal gov't debt. several of the US States are flat out broke. unlike Great Depress., we now have a credit based economy, which is contracting. housing is a historical high of GDP and I think it represents ~20% of GDP (could be wrong, someone correct me please) and it is shot and my read of the numbers is that it is getting worse. i could go on but you have heard it before.....just a matter of time.
DH - For a historical from recent history I look to the collapse that kicked in 1869 with the epic gold collapse via President Grant battering Jay Gould, really caught on with the collapse of an epic real estate bubble, this time in Europe leading to the calling in of notes taking out Jay Cooke & Co in 1873.
thanks miles.....i admit to forgetting all about that one. I did recently read "this time is different" which is a nice piece of some economic history. worth the read.
No doubt. It was one of my gifts to an esteemed economist from the Berkeley mafia of my acquaintance this past year. :-)
Sign me up
As the russian agents on South Park said
"I want to get paid before I die!"
Fuck! I want to borrow @ these rates TOOOO!! I wanna borrow a gajjilion dollars!
Psst... hey kid... wanna buy a mall?
3 words:
"Fuck the Fed"
TD, this is basically the equivalent of Brewster's Millions - the Fed has said they are going to spend $1.25T total by March 31st. So they are going to spend $1.25T total by March 31st, supply/demand be damned. Supply is really light, being the first of the year and all, but the fed is buying anyway.
The snap back in spreads is going to be violent when the Fed steps out.
ghost.....any guess as to 30 yr fixed?
The spread will go out to at least 150bps in short order, not easy to say what will happen to treasuries, should be dragged up via servicer selling.
There will be no snap back. Look at the UK and the end of their QE experiment.
...when the Fed realizes that the only way to get house prices higher is to pay Americans to take out a mortgage.
I thought this is how we got to this position in the first place.
I can't afford to buy RE. Artificially high prices have priced me out of the market. The only way I could ever hope to get in is if the prices are allowed to fall to reasonable levels.
They will, just be patient. It make take several more years, but it will happen. We could see 5% house price declines per year for the next several years.
Thx. I'm really not in any hurry, it's just annoying to hear pols chanting, "Buy, buy, buy!" and my only response is, "With what?"
Of course, "overpriced" is relative, I suppose. If I had more disposable income and fewer other debts, then RE prices would be more managable. If only. :)
I expect local property taxes to explode starting this year in order to incorporate into 2011 budgets. I almost feel sorry for those who took the tax credit and put zero down on a US Taxpayer backed FHA loan at historical, manipulated low interest rates. Values are still falling which lowers tax revenue on current tables which will also spur tax increases, the likes most have never seen or will be able to afford.
i feel even more sorry for those who put their own equity into real estate. At least with a 3.5% down FHA mortgage you don't have much to lose.
agreed that it will definitely take several years for this to play out to a bottom.
Benny and the Inkjets are about to learn what extension risk is all about.
LMAO!!! Now that is funny! Probably better than "Intellectually subprime."
...when the Fed realizes that the only way to get house prices higher is to pay Americans to take out a mortgage.
The second way is to tear down every vacant home.
That signals the end.
so, invest in demolition companies? imagine when China gets to our RE position in a couple years....that's a lot of demolition.
No way, haven't you heard Buffett says housing will be fixed in 2011!
Home prices will not go up for at least 5 years. Enjoy renting until then.
1) Employment will be soft for years with wages flat.
2) Real mortgage rates do not reflect likely default rates.
3) The next wave of Alt-A, Prime defaults have not hit.
Nobody is planning for an unexpected event in the economy.
They always happen when we least expect them.
Hmm... new word: "Planning." Gonna have to look into this.
I've received a couple of prospect calls for point of sale systems for restaurants that will be opening!
Pollyanna's!
Bill Bonner at the Daily Reckoning has a great piece to read!
http://dailyreckoning.com/private-sector-de-leveraging-a-rally-in-a-bull...
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