The ongoing financial mess has a lot of visitors asking us for more information on short-term rates.
Thus, we’re pleased to introduce this chart of indicators including daily conforming mortgage rates, Treasuries, Fed Funds, overnight Libor, and even Fannie Mae/Freddie Mac required net yields (basically, the ‘wholesale’ price of mortgage money).

Let us know what you think!

Bailouts have left the Fed seeking for more cash. The Treasury Department will begin a program today that will sell more debt in order to expand the Fed’s balance sheet. They will begin with a $40 billion auction of 35-day bills, and then will continue with a series of treasury bill auctions. Offers of billion of dollars in backing have left the government a little short on cash. Despite being a natural course of action, this could become a cause for concern of interest rates.

As new treasuries begin to flood the market, we wonder what happens if buyers don’t begin to line up. It all comes back to supply and demand; in order to attract investors, yields will have to increase. Unfortunately, mortgage rates are based on those yields, and therefore are likely to rise.

Only a few hours into the first trading day after Wall Street lost two of its oldest financial institutions, and investors are reacting typically to a very uncertain situation. Investors are making a “flight to quality,” pulling their money out of riskier investments and parking their funds in safe, low-yield investments like Treasuries.  “This is the normal course of action,” said HSH Vice President Keith Gumbinger. “People are not investing, they’re parking their money until they know what’s happening.  It’s defensive positioning:”

Individual investors should sit on their hands right now, said Matthew McCall, president of Penn Financial Group LLC, a registered investment adviser.

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