9 Times, Mrs. Bueller…

by Alex Stenback on June 30, 2005

Ed_rooneyNine.  Counting today’s .25% hike, that’s the number of times the Fed has raised interest rates in this latest round of tightening.  If at the beginning of this cycle in 2004 (or the beginning of this year, for that matter) you’d have suggested to any market expert that despite 9 consecutive interest rate hikes, mortgage rates would not rise, but drop to nearly all-time lows, you would have been laughed out of the room. Yet here we are:

Mortgage_vs_fedfunds_3 As usual, we refer you to The Big Picture and Barry Ritholtz, from whom we grabbed the graphic to the left [click for larger image] for pertinent commentary and expert parsing.

What’s more, Since today’s rate increase, mortgage rates are actually threatening to move lower still.  Below is a 15-minute increment graph showing today’s price movement for Fannie Mae 5.5% mortgage backed securities:
_15minutedailychartl (bars above the line mean prices are rising, and yields, or rates, are falling.)

This all of course has our Ricky Roma meter pegged.  Just about the time the world is convinced that rates will stay low and get lower, things move the other way.  This ‘conundrum’ gets curioser and curioser.

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