Mortgage Spreads Decompress But QE3 Divergences Start To Get Priced In

Tyler Durden's picture

As Bernanke was asked for the umpteenth time on LSAP and more specifically MBS purchases, the initial modest compression in mortgage spreads reversed and widened. However, TSYs and stocks diverged very notably as we suspect an initial kneejerk reaction to QE3 saw both being bought (and the USD weaken) long the half-life in this divergence?

Mortgage spreads did initially compress as Bernanke noted the possibility of additional MBS purchases should the situation warrant them. However, as equities rallied and TSY (rallied!!), the mortgage spreads deteriorated rapidly.

It did seem a little premature to be overly aggressively trading the QE3 divergence though

UPDATED CHART: more craziness

Charts: Bloomberg

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GeneMarchbanks's picture

'It did seem a little premature to be overly aggressively trading the QE3 divergence though'

How's that PrimeX doing?

Clueless Economist's picture

Green shoots...Recovery Autumn 2011

jdelano's picture

Is there really absolutely nothing happening in Europe today?

TruthInSunshine's picture

Buy stocks, especially the 50x p/e varieties that are really have eps losses without one time gimmicks.

Last one out of the equities Casino is a rotten egg, bitchez!

junkyardjack's picture

Once it gets the 50x p/e the only place left is 100x.  Deals like that don't come around a lot, hop aboard

srsly-wtf's picture

Merkel is sitting on GPap's face to shut him up....

Goldmanite's picture

Buy stocks. Doomers wrong once again.

camaro68ss's picture

haha your trolling wont work with a room full of people with brains.

This isnt a yahoo board

Goldmanite's picture

But....but...ZH and all bears were telling stocks were going down, they said an October crash was coming....

tmosley's picture

Who said that?  I never saw anyone around here saying any such thing.

d00daa's picture

oh fuck off and die already, bear market rally ftw where the fuck were you in august and september permaclown???

PicassoInActions's picture

Ask Jopamite's, they will bring the market down

LawsofPhysics's picture

Aside from some very useful spread information that I would not otherwise be looking for, what I see on ZH strongly suggests that equities will go up as the counterparty risk in ALL paper assets increases and the actually value of ALL paper goes to zero in the long run.  Timing is everything, play paper to get more paper to turn it all into physical assets that generate permenent revenue and improve your quality of life and chances of survival.  Do so before the banks runs and physical shortages start happening (as has been seen in the collapse of every single fiat system so far).  Good luck all.

SheepDog-One's picture

Hey Goldmanite dickhead in case you havent noticed your great 'bull market' has stocks trading at 15 year-ago levels. Gee, write home to mom about it why dont you.

unununium's picture

If you're trying to channel MillionDollarBonus, try harder.

greased up deaf guy's picture

do you and robo promise to come back and check in when gold goes higher than the dow (i.e., the REAL golden cross)?  promise? :-p

rumblefish's picture

"Buy stocks. Doomers wrong once again"

as long as the stock is SDOW, I agree.


TheLooza's picture

Is today the "just because" rally?  What the fuck?

TheLooza's picture

I mean, can we get two red days in a row? Reality vs. weak busted rumor in a two day match up.  Reality should be able to manage 10-8 and 10-9 rounds.  Not a fucking draw.

GeneMarchbanks's picture

No such animal as 'reality' pal, only perception. You have an entire network seeing(pun intended) to it(perception) called CNBC.

You'll see plenty of red soon enough... only I'm afraid it'll be elsewhere.

TheLooza's picture

When the real red starts flowing, views on "no reality, only perception" begin to change too.

fuu's picture

We had Monday and Tuesday in the red. Today is the little dead kitten bounce.

SheepDog-One's picture

Pricing-in 'QE3' again you see...

qussl3's picture

Non stop coverage on QE3 incoming.

Gotta get the bagholders aboard.


DormRoom's picture

America, remember when growth was from innovation, and entrepreunship? Now, your financiers only fund growth from Central Bank debt.  The QE addiction needs to stop.

 Remember your great saint, Thomas Edison.



dexter_morgan's picture

Thankfully Tesla schooled him on AC power though, eh

GeneMarchbanks's picture

Tesla was the saint. Edison was a moneywhore. Poor example kid.

dwdollar's picture

In fairness, they both contributed an enormous amount. Edison was a better businessman/entrepreneur and Tesla was a better engineer. They would have made a fantastic team if they could have set aside their egos.

GeneMarchbanks's picture

Fair enough but only one of them was a ponce, it should be noted.

jdelano's picture

"better businssman"--if you mean because Edison was willing to utterly abandon any sense of morality or fairplay by launching a sustained and totally spurrious smear campaign by claiming that tesla's alternating current was instable and deadly while edison's dc was safe and benign, well (which by the way failed, as Tesla's AC was a markedly superior technology) I guess you're right? 

Fucking America.  Lie, cheat, steal, extort, and appropriate the talents of others and they'll call you a " business icon"  (Rockefeller, Gates, Jobs).  Use your brains to innovate and your hands to build something from the ground up and they'll call you.....nothing.  They won't even remember your name.   

tmosley's picture

Moneywhores get it done in a free market, baby.  Saints die poor, and leave only rumors and legends behind them.

Manthong's picture

I wonder when folks are going to figure out that debt as an asset is a bad idea if the debt can't be paid.

LawsofPhysics's picture

The "recovery" depends on no one figuring this out in mass.

espirit's picture

Also worthy of mention is vapor volume. 

How long is that going to last, ask ye?

junkyardjack's picture

It'll come in tomorrow just like last time, crap-tastic

Goldmanite's picture

And the DOW keeps ramping up. My god bears are so f.....

Irish66's picture

I'm rather enjoying your need to proclaim yourself.  Need a hug from somebody

and some attention. Poor baby

d00daa's picture

wtf are you talking about still trading below mid oct and the 200ma, i hope you don't trade the way you troll lmfao assclown.

greased up deaf guy's picture

hehe... markets haven't even retraced yesterday's losses, but the bulls are claiming victory.  queue bob pisani...

blunderdog's picture

Seriously, this shouldn't surprise anyone.  This is a living example of what happens when the fund manager has Alzheimer's.

Every day is a brand new universe, because you weren't really "here" yesterday.  No unpleasant memories!

SheepDog-One's picture

Goldmanite probably owns 3 shares of NFLX, and indexes at 1999 levels are good enough for him to call 'bull market' I guess.

Yen Cross's picture

 I would LOVE to see Santelli cut loose on Liesman on  ( KUDLOW)!


  That right shoulder on the (risk) chart is just about finished! This is just Hedgies/ sovereigns chasing the money! They missed the flows twice.  A { HAT TRICK }, is in the making!


   I got flat last night when a good poster reminded me of qe- , BS... I'm liking London!

bnbdnb's picture

I believe last time this divergence got so wide, EUR dropped dramatically overnight.

midgetrannyporn's picture

Tickle down bitchez.

GOSPLAN HERO's picture

Central planners know what is good for USSA.

Deadpool's picture

bullish, Bullish, BULLISH! markets don't lie. Santa Claus rally here we come.

Peter K's picture

It's all about the USD. Ben trying to keep it on the mat, in the face of a stagnant US economy, a crashing EU economy, and inverting interest rate expectations/soon to be differential in the EUR/USD:)

SheepDog-One's picture

Yea really, lets see how long that lasts.

ssp2s's picture

Markets must rise during Ben's presser.  That's a top.