As people read the economic numbers, they know the Fed is still there. |
As rates float higher, it's better to keep your money close to home and wait for better opportunities down the road. |
Dealers weren't that interested even though we had good indirect bidding. |
It brings it back to oil. As long as energy is making new highs, Treasuries will rally. |
Let's take it one step at a time. Let's take the 30-year and see how that goes. We haven't had such long- duration assets in five years, so let's not go from one extreme to the other. |
Mortgages had been richening up for the bulk of the beginning of year. |
Mortgages were super, super rich in February. It made sense for them not to increase their portfolio using mortgages, but they did increase it, and it was mostly floating-rate type products, mortgage-related securities and those kind of asset-backed products. |
Now, with the inflation numbers, there are some worrying about Fed credibility, worried maybe that they're falling behind the curve. |
People were thinking that, if the oil refineries take a direct hit, energy prices would shoot up and it would have a bigger impact on the economy. |
The Empire State report was strong ... and the selling pressures stayed there. |
They lost the incentive to issue debt to buy mortgages during the end of January and the majority of February. |
Traders normally try to use the supply story to push rates higher. |
We had a relief rally on the back end yesterday (Thursday), and it's carrying through to today. |
We had a relief rally on the back end yesterday, and it's carrying through to today. Plus, with the refunding out of the way, it's lifted a weight off the market. |
We're recommending investors stay short because we think there's more movement to the downside. |