Rate Update June 3, 2009

Fixed Mortgage Rates are down from yesterday

The bleeding has finally stopped…for now at least, as Mortgage Backed Bonds are trading up about 20 basis points on the day.  Although down from previous highs earlier this morning, it is good to see that bonds have stopped the freefall and are at least slowing the process of rates increasing, as they have the past week and a half. 

Treasury Secretary Tim Giethner has been in China lately attempting to convince them that their assets are safe with the US (read: China buying US Mortgage Backed Securities).  It has been reported that the audience actually laughed when Mr. Giethner mentioned this.  It isn’t too surprising that China wasn’t impressed with the Treasury Secretary and his words since he doesn’t even have a good track record in the US either.  Hopefully this disbelief of safety for Mortgage Backed Securities doesn’t affect China’s appetite for our bonds too much…but I am afraid it may.   If this ends up being the case, it could be just one more reason why we don’t see interest rates get back down to the levels we were seeing at the beginning of the year.  

Current Outlook: Floating as bonds look to be off the track they have been for the past 5 trading days