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Mark this day: The worst is over

By Lou Barnes, Friday, September 19, 2008.

Mark this day: The worst of this crisis has passed. However, not yet the halfway point in time: We are 13 months into this wreck, and you'll sure as hell feel credit-market distress 13 months from now even though the greatest risk has passed.

I wrote last week that I heard "hoofbeats of cavalry on the way" -- for a while this week it looked as though John Wayne had arrived to shoot the settlers and give firewater to the Apaches. more...

The politics of bailout: a waiting game

By Lou Barnes, Friday, September 12, 2008.

Mortgage rates have not been able to hold the early-week low at 5.875 percent, but are no worse than 6 percent for the lowest-fee deals.

The Fannie-Freddie takeover instantly knocked retail mortgage rates down 0.375 percent, but that's been it. The sky-high spread versus the 10-year Treasury note has compressed from 270 basis points to mere cloud-height 235 basis points -- but that's still 70 basis points too high. more...

Is the Fed out of options?

By Lou Barnes, Friday, September 5, 2008.

A big run to Treasurys has pulled mortgage rates down to 6.25 percent, but the spread to the 3.58 percent 10-year T-note remains immense.

Three forces have knocked all Treasury yields down a quarter percent in four days. First, money scrambling to get out of commodities and the euro has to go somewhere, and the first preference of the foreign investor is Treasurys. more...

Fed gets it: Credit crisis trumps inflation

By Lou Barnes, Friday, August 29, 2008.

Mortgage rates improved again this week, slightly, to 6.375 percent and the 10-year T-note trading often just under 3.8 percent, a resistance level since spring. The improvement anticipates a weakening economy, but a further decline in rates will depend on the fact of weakness. A test comes quickly, in the first August data due next week. more...

Fannie-Freddie deathwatch begins

By Lou Barnes, Friday, August 22, 2008.

Mortgage rates bottomed again at 6.5 percent, as they have since May, maintaining a consistently wide spread to the 10-year T-note, which bottomed at 3.8 percent. It will take a substantial negative economic event or news to break below these rates.

Economic data were thin. The July index of leading indicators fell hard, the outsize 0.7 percent drop entirely due to rising claims for unemployment benefits and a big slide in building permits. more...

Feds, don't forget Ginnie, the other GSE

By Lou Barnes, Friday, August 15, 2008.

Mortgage rates are falling, almost 6.5 percent with the lowest fees. All other interest rates are headed down as well, on a glide path parallel to the global economy: the 10-year T-note to 3.83 percent (traded 4.1 percent only a week ago), and the 2-year down to 2.37 percent acknowledges zero probability of a Fed rate hike from its current 2 percent overnight rate.

Domestic data are sliding at shallow slope, but the stuff from overseas is dramatic. more...

'The Crunch' is on the loose

By Lou Barnes, Friday, August 8, 2008.

Mortgage rates are a hair lower, under 6.75 percent now, but spreads to Treasurys have widened despite overt Treasury backing of Fannie and Freddie.

There is a three-track story unfolding today: the U.S. economy, the ex-U.S. global economy, and The Crunch. To maintain clarity and composure, keep 'em separate! more...

'Walkaways' go mainstream

By Lou Barnes, Friday, August 1, 2008.

Mortgage rates are back down to 6.5 percent (low-fee), taken by sudden understanding that the economy probably passed its high point for the year in June.

A huge spike in unemployment claims (to 443,000 last week, 60,000 above recent range) may overstate weakness, and today's announcement of 51,000 jobs lost in July may understate, but weakness is spreading beyond housing, construction and manufacturing. The purchasing managers' July survey came in dead flat, at 50, but with the fewest new orders since October 2001, and tailing strength in exports. more...

'Bazooka Backstop' targets mortgage mess

By Lou Barnes, Friday, July 25, 2008.

Mortgage rates are still stuck near 6.75 percent, the financial markets confused and locked up until a blast of argument-resolving data arrives next Friday.

Oil down to $123 and natural gas to $9.25 helped stocks for a while, but they still fell apart on no-bottom housing news and a sinking job market. The economy is obviously weakening, but rates are held up by fear that inflation is the greater risk -- even the stock market's Thursday elevator-shaft could not hold down long-term rates. more...

'Falling oil trumps a sinking globe'

By Lou Barnes, Friday, July 18, 2008.

A Fannie/Freddie Treasury guarantee on the way means mortgage rates have fallen, right? The huge spread between 10-year T-notes and mortgages has closed, for sure? All these mortgage-backed securities as good as Treasurys, they're trading the same way? Fannie and Freddie can borrow cheaply, so mortgage rates will be cheap, too? more...

Fannie-Freddie: public policy mangled

By Lou Barnes, Friday, July 11, 2008.

The Fannie-Freddie panic began on Wednesday -- that is, this Fannie-Freddie panic, as opposed to the prior ones. The firms had already lost 90 percent of their stock value, and can continue to lose half of their remaining value every day forever with no trouble. It's losing the other half that's a problem. more...

Economies are tanking everywhere

By Lou Barnes, Monday, July 7, 2008.

The immediate credit market response to a wave of new economic data is as-was, lowest-fee mortgages 6.5 percent, 10-year T-note just under 4 percent.

However, last week marked very significant change: Economic decline here and in Europe is now beyond argument, and the decline is fighting inflation for the Fed and the European Central Bank, neither of which needs to raise its rate further. more...

1930s-style collapse haunts economy

By Lou Barnes, Sunday, June 29, 2008.

Mortgages are sticky near 6.5 percent, Treasurys getting most of the flight-to-quality benefit from the stock market dive.

Economic data this week were slim and predictable: Consumer confidence fell again, and rebate checks plumped May spending and income, but gave no durable, corner-turning boost. The "personal consumption expenditure deflator" in the spending/income report confirmed the remarkable (and painful) "core" inflation performance, only a 0.1 percent gain: Prices for everything except food and energy are on or over the edge of deflation. more...

Market scarred by inflation, capital exhaustion

By Lou Barnes, Sunday, June 22, 2008.

Mortgage rates have improved, down to 6.5 percent, as credit-market psychology has entered a substantial reversal.

In the mass psychosis of late May, the financial markets suddenly decided that the economy had passed bottom; the banking system was recovering; inflation had become the dominant risk; the Fed would therefore begin an extended rate-raising campaign; and it was a good idea to dump every IOU within reach. That hallucination is now responding to medication.

Nothing like hard news to clear the mind: Mortgage applications collapsed 8.8 percent in a week under the weight of spiking rates. Industrial capacity in use fell again in May, now 79.4 percent, overall production sliding 0.2 percent versus expected gain. more...

Fed foolish to raise rates now

By Lou Barnes, Friday, June 13, 2008.

The credit markets have concluded that inflation risk now forces the Fed into a sustained series of increases in its overnight rate, presently 2 percent.

Interest rates -- all of them -- spiked in the last 10 days. Lowest-fee 30-year mortgages to 6.625 percent (if you're a shady character, FICO under 720, make that 6.75 percent), 10-year T-notes to 4.2 percent, and Fed-tied 2-year T-notes to 2.9 percent (up 0.55 percent this week). more...

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