Long-term Treasury yields blew up this week, along with mortgage rates. In two weeks, the 10-year Treasury-note has jumped from 2.25 percent to 2.85 percent, and mortgages from sub-5 percent to 5.5 percent (even that costs a 1 percent fee today), shutting down refinances altogether. Not even the all-time lows had created demand for purchase loans. There are good odds that this move is temporary; even so, why did it happen? The arithmetic alone is peculiar. The Fed began on Jan. 5 to buy mortgages at a $100-billion-per-month rate. There is not half that much demand for new purchase loans, and refis are net-neutral in system supply and demand. So, somebody is selling existing loans in greater volume than Fed purchases. China and Japan, big holders of Ginnie Mae, liquidating to rais...
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