Mystery Anniversary. July 14 marks my 12 year wedding anniversary with my wife Colleen. Each year for our anniversary we trade the planning responsibilities. Last year was my year and this year Colleen is doing all the planning. That means every other year we have a fantastic anniversary planned…yep. Two years ago Colleen planned a mystery anniversary…I wasn’t allowed to know where or what we were doing.
She surprised me when we ended up at Disneyland, kid-free, for the weekend and it was awesome. We stayed in their fancy hotel, ate at their premiere fine dining restaurant in a kitchen-side table where the chef catered to us, and we walked the park at night. It was romantic and, well, fun!
This year is another mystery…on Friday night I’m headed somewhere and I haven’t a clue where I’m going. All I know so far is we’re getting on a plane and my in-laws are watching the kids (they arrive tonight). How lucky am I?
My Market Watch: Bonds Down – Fixed Pricing Worse 0.125
Bonds are trading down about -30bps this morning but I’m not real concerned about that. I am concerned about the Fed minutes which will be released at 11a.
There is reason to believe the minutes will not be favorable for bond trading. That is, traders will be reading the minutes and looking for an interpretation on where the economy is headed. If the minutes give traders a feeling that the economy is strong, or if the minutes solidify with strong language the Fed’s new position on tapering QE, then they will invest in stocks and sell off bonds to free up those investment dollars. If that happens our rates/pricing will get worse. On the other hand, if the minutes indicate a weaker economy or soften the discussion on tapering QE, then traders will sell off stocks and buy bonds instead…this would improve our rates/pricing.
So what will happen? My opinion is there is more downside to upside. We already know the crux of that Fed meeting…they agreed to begin tapering QE and plan to eliminate it mid-2014. That’s why bonds have sold off over 600bps and why rates are so much worse. So why would we expect the minutes to reveal anything other than more of the same? It just seems to me the potential positive outcome of traders’ interpretation is far-fetched. It’s just my opinion…for all I know the minutes might reveal some beautiful discussions on continuing QE indefinitely in which case we could see a nice improvement in rates…but I doubt it.
Perspective. 30-Year Fixed Average Rates:
- Past 40 years: 8.15%
- Past 30 years: 7.45%
- Past 20 years: 6.52%
- Past 10 years: 5.72%
A word on locks. Even though turn-times are fast, I advise longer term locks or at least a pricing cushion to account for possible lock extensions. Flexibility in getting additional days is not as elastic. I advise 45 day Locks. If you must lock 30 days then be sure to build in additional rebate in case you need to pay for an extension. This is good smart business.
|Distinguish Yourself. In order to succeed in this business and in this market, you must find a way to distinguish yourself from other LOs. That is, if you are going to get more reliable referral sources, you must be able to clearly convey several compelling reasons why they should use you….My calendar is getting full – I am scheduling presentations to discuss (1) How to Be Successful In The Future Market, (2) Where to Look For Additional Referral Sources, and (3) How To Distinguish Yourself From Other LOs. Let me know if you’re interested in a presentation….