Posted by: cfigueira | May 7, 2010

Mortgage bonds prices

Mortgage bonds prices remain lower this morning erasing some of the gains from yesterday afternoon.

Unemployment @ 9.9%, expected @9.7%, Payrolls +290k, expected +200k. The initial reaction was terrible with mortgage bonds falling off almost 1/2 a discount point on the day. Fortunately we rebounded a little bit from then to hold onto some of the gains from yesterday afternoon but we still are worse on the day.

The Greek/Euro economic instability still has the financial markets reeling. There are grave concerns that the Greek bailout is just the tip of the iceberg and the contagion of sovereign debt defaults could ripple across the globe. In addition, Paulson and Geithner are testifying to a Congressional panel about Bank Reform and so far the reaction from the stock market has not been good.

Stocks got crushed yesterday but now there are reports that a lot of the weakness was tied to a trading error. That was bad news for bonds because all those gains are now unwinding earlier this morning. The DOW was up 23 points at the open but now is down 67 points….the wild swings continue.

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