A very astute CMO trader once said to me – “Some things never change – somehow I bring 100m of pass thru securities backed by 30 year fixed rate loans into the room and miraculously 45m bullet proof 3 year notes pop out the other side”. Trading the mortgage market has always been a complicated […]
The Answer – “The Debacle”. For the last decade, large reserve asset managers have accumulated sizeable positions in “low risk” US Treasury, Agency Mortgage and IG Corporate securities. We have all seen the charts where foreign holdings have gone parabolic since 2000. A large part of that accumulation has taken place because of capital controls […]
The high print for the year in the current coupon 30 year mortgage rate was 4.67 on April 5th. We touched 4.45 yesterday and they are going up at 4.47 as I write. Only two months ago, back on October 8th, we touched a low of 3.20. If one were to have said in October […]
I have spent the better part of the last couple weeks traveling throughout the US and Europe seeing clients from nearly all of JEFs’ business lines – govvies, abs, emg and equities. By far, the number one topic of discussion has been QE2. And one thing is crystal clear after all these meetings – QE2 […]
The reality of QE2 has finally set in. Over the past month 10 year Treasury yields are about 50bps higher and the S&P is up about 3%. The US equity market is now up over 10% for the year while annual returns for 10yr US government securities, which had peaked at nearly 14%, are now […]
It has been back to back meetings in London this week so apologies for the radio silence during these tumultuous times. There are so many things to discuss I’m not sure where to begin: US growth upgrades from the econ mob, huge positive US fiscal stimulus surprises, pre-committed reflation policies from Ben, the debut of […]
The tangled web of geopolitics in markets gets more complex by the day. Yesterday, unnamed US officials piped up about adding additional funding to the EFSF. Why in the world would the US want to bail out peripheral Europe? Aren’t the Americans supposed to be done with bailouts and fiscal profligacy? The Fed is facing […]
Europe is going through an exercise in self-destruction. The Fed is buying 600b in Treasuries. And North Korea is vowing a “physical response” to US-South Korean military drills off its coast. If these events could not get the Treasury market to rally then what will??? Answer – NOTHING! There is just not a lot of […]
In the last 24 hours I have had conversations with a wide array of non-English European folks. Many I have known in the markets for 15 to 20 years. The common theme in all of the conversations, even the senior policy makers, was the acquiescent nature of the discourse. For over a decade I have […]
Let’s start with a few fun quotes from the weekend: Wolfganf Munchau – “The eurozone is maneuvering itself into a position where it confronts the choice between two alternatives considered “unimaginable”: fiscal union or break-up” Wolfgang Schaeuble – “We are not just defending a member state but our common currency” Brian Lucey, associate professor of […]