Mortgages have been remarkably stable in the 6.75 percent-6.875 percent area while the all-powerful 10-year T-note has run in a much wider range: 10 days ago touching 5.32 percent, on Tuesday trading briefly at 4.99 percent, and today an early burst to 5.22 percent. Two lessons here. First, inject volatility into a system, as did the 10-year's rocket in June from 4.6 percent to the levels above and you'll have high volatility for quite a while. By "volatility" I mean true up-and-down action, not the Wall Street standard explanation to a client who has lost his shirt in a straight-line move. Second, Treasury volatility versus stable mortgages is the signature of market uncertainty about the inflation/growth outlook, and grave concern about credit quality. In this week alone we've gone from...
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