Volatility is the name of the game

Do not go to the bath room with an unlocked loan or open trade. The 10 minutes can cost thousands! Volatility and panic set in the market again as traders once again questioned the governments plan to buy mortgage backed securities and bid up commodity prices and sold the dollar. Looking forward to the fed having to auction off more Treasuries in their effort to raise the $700 Billion needed to finance the bailout. It’s pretty much a sure thing that anything the government estimates is off by 2/3rds. So it’s only a matter of time before they are in the trillions.

October Crude contracts were trading $25 higher at one point, the highest one day gain in history, closing up $16.37 higher on the day. With oil higher and heavy metals such as gold rallying nearly $45 an oz, we are once again touching on inflationary fears which would make mortgage rates soar. After hitting a recent high last Tuesday of 101.69 the 5.5% MBS have given up nearly 175bps to close at 99.9375. The Dow got hammered and gave up nearly all Fridays gains to close down 372 points.

If we are in a recession, mortgage rates don’t know it yet. The markets tend to be very omniscient.

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