Hold on to your Seatbelts

This week has been another one of those roller coasters in the mortgage business! We were starting to see some light at the end of the tunnel mid week, but instead of sunlight, turns out it’s a train.

Mortgage bonds had a great rally on Wednesday and Thursday but that all changed for the worse today. As I said in last week’s market recap the strength of the dollar and high oil prices continues to rain on our parade. The buzz of the week was based on speculation that the European and/or Japanese Central Banks would begin the purchase of US Treasuries and Mortgage Bonds - in an effort to slow down the decline of the US Dollar. (A weaker Dollar helps our exports by making them more affordable abroad, but hurts the already skittish economies within the European Union and Japan.) What caused the upset in the market was a speech given by Greenspan today. He stated that this foreign “intervention” may help in the short term but will not have a prolonged effect in the long term. Based on this, both the stock market and bond markets yet again got pummeled as the fear of inflation may soon become a reality.

Where do we go from here??? I don’t know of anyone who would be willing to speculate at this point in time. Just know the days of low interest rates are rapidly fading.