4th day in a row of rising rates

Interest rates have risen for the fourth consecutive day. QEII has come and gone and with almost no fanfare as predicted. The reason rates have not moved lower since the FED announcement is simply because the mortgage bond market had one trillion dollars already priced into it. When the FED announced 600 Billion in asset purchases it actually ended up being a disappointment to the markets and they are correcting their long term positions now. Here is some insight from Sigma Research:

Interest rates continue to increase; so far the fourth day in a row interest rates have climbed. The last three days the 10 yr note yield has increased 17 bp and mortgage rates up about the same; add in the decline so far this morning, the 10 off 23 bp and mortgage rates down 18 to 20 basis points. The bond and mortgage markets were expecting the QE move would drive rates down and the markets were heavily long, now we know QE 2 isn't going to push rates lower as widely expected and all those long positions are being closed out driving rates up quickly. Every technical indicator we apply to bond and mortgage markets are now bearish. The bond and mortgages markets opened weaker this morning but by 10:00 have re-gained the early losses

The QE decision by the Fed is being criticized heavily around the world as unnecessary and an attempt to drive the dollar lower to increase US exports. Many finance ministers are worrying over a currency war with nations moving to lower their currencies to accomplish the same thing the Fed is doing. Haven't heard this much strong criticism of a Fed decision in years.

I personally think that QEII was not needed and only served to further weaken our dollar as well as raise our debt levels. With rates already testing all time lows before the announcement, why was there a need to try and drive them lower? Do people really think 3.0% on 30 year fixed rate money is going to happen. I will be shocked if it does. However I do think we are seeing an over correction right now and a mortgage rate rally will probably happen in the next few days. This rally will not get us back to historic lows, but rates are still amazing!!

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