Phil Grossfield's Blog

Don’t Let Your Locks Expire. The Interbank Lock Desk is one of the best I’ve ever worked with. But with the market down this big in such a short period of time, don’t expect a whole lot of love. All lenders are now in a serious predicament on locked loans.
Make sure to:

1. Extend your locks – do not let them expire!
2. Upload your submission packages within 10 calendars days of your lock date.

If you let your lock expire, there will be no relief.

Bonds have now been on a significant downward spiral for the last 6 trading days in a row. Today alone we lost -134bps. What’s more is there is no floor of support even in sight. What I mean is traders usually look to the past performance of bonds to help them decide when to buy. These indicators are called moving averages and when the bond is heading down they are called “floors of support.” They are referred to as floors of support because when the bond reaches the floor, traders usually look to buy…this makes the price of bonds increase and betters rates/pricing. But right now there is no floor…that’s why the bond just keeps selling off and down down down down down it goes.  What we need is a statement by someone at the Fed to reaffirm QE so we can reverse the trend….

Yes, Bonds Will Come Back…. Why do I think bonds will come back?  Because things are setting up for it in my opinion. Stock gains can’t last forever and eventually traders will start taking profits and selling off. Moreover, and again this is just my unprofessional opinion, the next negative economic report will have a bigger than usual impact because traders are looking for a reason to sell. And here’s the kicker…Bernanke and the Fed have not completely abandoned Quantitative Easing. They are still committed to buying mortgaged-backed securities for the remainder of the year. All that Bernanke said thus far is they are going to begin reducing the amount of buying…that’s a far cry from ditching it. I predict Bernanke will make a statement soon that reaffirms that commitment and when he does, bonds will sell like popovers at a Passover celebration. The big question is when, and to that I have no answer my friends. But I hope it’s soon!