Good morning! Fed Chair Jerome Powell and former Fed Chair Janet Yellen are meeting today to discuss the housing market. From April 2020 to April 2021, home prices have jumped 14.6% according to the Case-Shiller Home Price Index. While low inventory and building material supply chain issues are often blamed for this rapid increase, we would be remiss not to mention the Fed’s huge asset purchases. Since July 2020, the Fed has been purchasing $40 billion of agency MBS and $80 billion of U.S. treasuries every month. Besides signalling the continuance of Q.E, these large asset purchases also drive down long-term lending rates, resulting in higher demand for new mortgage loans and for housing. When Powell denied the link between asset purchases and home prices, he may have missed the mark. The Fed rarely times their moves correctly, and the overheated housing market will likely just provide one more example of the Fed failing to taper at the right time.
In the bond market today, the 10yr. T-note is -3/32 to yield 1.31%, and the FNMA 30yr. 2.5% is trading at $103-23 to yield 1.61% with a +88 spread over the treasury curve. Thanks, and have a wonderful weekend!
Cherry Picks
10 Year Fixed
15 Year Fixed
20 Year Fixed
30 Year Fixed
Agency CMBS
Agency CMO – 3 Year
Agency CMO – 5 Year
Agency CMO – Long End
Jim Tait is a registered representative with and offers securities through Hanover Securities, Inc. (Hanover), Member FINRA & SIPC. Although this information has been obtained from sources we believe reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Securities that may be shown are subject to availability and changes in price. Past performance is not indicative of future results. Changes in any assumptions may have a material effect on projected results.
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