Mortgage-Bond Yields Head for Biggest Weekly Rise Since October

[Joanne98]

Source: Bloomberg


May 29 (Bloomberg) -- Yields on Fannie Mae and Freddie Mac mortgage bonds soared this week, driving up interest rates on new home loans. Yields headed toward their largest weekly percentage rise since October.

Increases this week, spurred in part by a jump in Treasury yields, at one point were as big as any since 1984. Today, yields on Washington-based Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds declined 0.09 percentage point to 4.48 percent as of 10:45 a.m. in New York, according to data compiled by Bloomberg. That’s up from 3.94 percent on May 20.

The Federal Reserve’s bid to use purchases of so-called agency mortgage bonds to bolster consumers with cheap refinancing and homes prices with low borrowing costs is foundering as more investors begin to shun dollar-denominated debt as they question whether demand can match record Treasury sales and inflation can remain in check, said Julian Mann, a vice president at Los Angeles-based First Pacific Advisors LLC.

“You can say goodbye to ‘Refi ‘09,’ ” said Mann, who helps manage about $4 billion in bonds. Other debt investors “don’t necessarily want to buy anything the Fed owns because the moment they stop buying you get crushed,” while the central bank’s purchase are becoming “self-defeating” as they boost borrowing and energy costs, he added.

The U.S. dollar headed for its biggest monthly drop versus the euro in 2009 and fell today against major counterparts including the Australian and New Zealand dollars after South Korea said its state pension fund plans to hold fewer Treasuries. Treasuries headed for a second month of declines. Oil rose, heading for its biggest monthly gain in a decade.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aEwmo3tytik8&refer=home

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This is a HUGE problem. Rising interest rates will fuck up everything.

[Po_d Mainiac]

1. BUT, BUT We're almost at the bottom.........NOT!

"This is a HUGE problem. Rising interest rates will fuck up everything."

or

There is no faith that the Fed will be able to reel in the money fast enough after the "QE." The sharp move in Interest Rates may only be a reaction to expectations of further decline in the USD and the inflationary storm front just over the horizon. Either way, the fuck-up is coming :hurts: