Interest rates are eating a healthy portion of leftovers from the main course we had earlier in the week: a bunch of goose eggs and a lame duck. With no good news to feed off and a stock market that's trying to make a comeback, mortgage-backed securities are currently down 16 bps, and 125 bps in the past 4 days. When will we hit the bottom?
Bonds are clearly oversold and I'm thinking we've got to have a nice little year-end rally. But what if we don't stop selling off and rates climb into the high 6% range? I have a funny theory about higher rates. I think most people are procrastinators and need the threat of something bad happening to move them into action. As amazing as rates have been over the past couple weeks, I think we'll see more folks buying and refinancing if they are scared rates are going higher.
Historically, we're nowhere near the highest rates have been, but if the news starts saying rates are heading toward 7%, it's time to get ready for the phones to start ringing. What do you guys think?