Mortgage Market Report for Thursday April 17, 2008
Today the bonds started weak and ended strong. The daily swings are wild. After an ugly open bonds received a soft jobless claims report.
The mortgage bond market spent most of the day fighting its way back from far lower levels while the stock market mostly fizzled instead of sizzled due to "mixed" corporate earnings reports and poor economic news. Bonds also had to deal with comments made by noted inflation hawk Richard "Loose Lips" Fisher. The Dallas Fed President and voting FOMC member cut loose with a new warning "against inflating our way" out of the credit crisis and stated additional interest rate cuts "may just compound the problem."
However, the bond market successfully contended with a supply issue today as the Fed auctioned $25 billion in 28-day credit through its Term Securities Lending Facility (TSLF). This Fed financing tool provides banks with an option to pledge their illiquid mortgage-backed securities as collateral in exchange for US Treasuries that can sold and used for new loan funding. The major stock market indexes ended mostly flat but "mixed" with the Dow Jones Industrial Average gaining a measly point.
The next clear level of support is at the 200-day Moving Average, which lies about 70bp below current levels.
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A quote from George Burns
"You can't help getting older, but you don't have to get old."
Roger Herrick
http://www.contactherrick.com/
California Mortgage Broker
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