Bonds are getting beaten up today. There's a saying in the market... "the trend is your friend" meaning that the trend helps you make proactive decisions to better manage your investments and your expectations.
While it is our friend it sure isn't being so friendly in the current direction. It was a mixed bag of economic news this morning with more poor corporate earnings reports, oil on the increase, and GDP coming in better than expected. This mixed news had bonds bouncing around this morning.
I'm not sure the Fed is really helping us much either. As I mentioned yesterday, the Fed is purchasing higher rate coupons which are having little impact on the lower rate coupons (bonds) where new mortgages are being bundled. To date, they have purchased $16.8 billion in the past week (Jan 22 - Jan 28) for a total of $70 billion.
The market has lost 137 basis points since Wednesday's high as you can see in the chart below. That translates to a worsening in home loan rates of approximately .375%. And lenders are very quick to pull the trigger and increase rates when the market worsens because they are striving to protect their balance sheets.
Remember the old saying... "snooze, you lose"? If you are considering either a purchase or a refinance, get your paperwork in order, you application completed and submitted so you are positioned to take advantage of the next dip.
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