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Is the tide turning in Real Estate? 10 year treasury note rising fast!

By Goran_K   Follow   Thu, 18 Oct 2012, 8:32am   2,140 views   34 comments
In Irvine CA 92614   Watch (1)   Share   Quote   Permalink   Like   Dislike  

If you keep up with the 10 year treasury note and understand the relationship with mortgage rates, something interesting has been happening the past 3 months. Since hitting an all-time low back in July (1.44) which no doubt has had a hand in creating "affordability", the 10 year yield has now risen in August, September, and now October

http://www.marketwatch.com/investing/bond/10_year

It could possibly hit low 2s for the 10 year, and go OVER 3 for the 30 year! That would send the yields back to what they were earlier this year when the market was hitting new lows in price per sqft.

Could this be the straw that breaks Bernanke's back?

Also add:
- Sales volume dropped nearly 20% from August to September
- But also interestingly, mortgage applications dropped another 14% (they are already at 1995-1996 levels)

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1. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

   1   8:35am Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   Dollar is even gaining strength: http://www.marketwatch.com/story/treasurys-dollar-edge-up-after-jobless-claims-2012-10-18

2. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

   2   9:03am Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   http://www.sacbee.com/2012/10/18/4920901/bankrate-mortgage-rates-continue.html ... and there it is. Mortgage rates heading back toward 4%. F*ck you Ben!

3. everything Follow Befriend (2) 3 threads 547 comments Madison, WI

   3   8:56pm Thu 18 Oct 2012   Share   Quote   Permalink   Like (1)   Dislike   Shorts covering. Still, last month or two, seeing new lows on bank rates I'd expect we had a storm of refinancing.

4. SFace Follow Befriend (2) 61 threads 1,302 comments Premium

   4   9:18pm Thu 18 Oct 2012   Share   Quote   Permalink   Like (2)   Dislike   QE3 specifically buys mortgage backed securities, not US treasuries. While the 10 year treasury influence rates, the 40B monthly purchase, specific to mortgages will keep mortgage rates low. Treasuries went down faster than mortgage rates in 2012 so they will likely close the gap. Instead of T + 1.75%/2% range, it will be more like T + 1.25/1.50% with QE3.

5. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

   5   9:43pm Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   SFace says QE3 specifically buys mortgage backed securities, not US treasuries. While the 10 year treasury influence rates, the 40B monthly purchase, specific to mortgages will keep mortgage rates low. Not arguing with your facts, but this seems like a distortion without precident.

6. bmwman91 Follow Befriend (7) 37 threads 1,531 comments Mountain View, CA bmwman91's website Premium

   6   9:50pm Thu 18 Oct 2012   Share   Quote   Permalink   Like (2)   Dislike   B.A.C.A.H. says Not arguing with your facts, but this seems like a distortion without precident. Absolutely. I do not think that anyone disputes that. Ben Bernanke himself has stated openly that he wants to drive the housing price "recovery" as he sees it as being key to fixing the economy. He actually said that he wants prices up to create the wealth effect so that people are willing to borrow & spend again. Yup, that's the grand master plan. Aren't you glad that we have such visionaries at the helm?

7. SFace Follow Befriend (2) 61 threads 1,302 comments Premium

   7   9:56pm Thu 18 Oct 2012   Share   Quote   Permalink   Like (2)   Dislike (1)   Goran_K says Dollar is even gaining strength Nope, just ran through Q3 reports today, FX gains 3.2% in Canada and around 2.8% in Japan just off the top of my head. for the quarter ended Sep 30th. It was a weak weak recent quarter for the dollar.

8. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

   8   11:13pm Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   bmwman91 says Absolutely. I do not think that anyone disputes that. Ben Bernanke himself has stated openly that he wants to drive the housing price "recovery" as he sees it as being key to fixing the economy. He actually said that he wants prices up to create the wealth effect so that people are willing to borrow & spend again. Yup, that's the grand master plan. Aren't you glad that we have such visionaries at the helm? Bernanke basically put his foot to the floor, and the printing press is at full steam, and nothing is happening. Anyone ever drive a car where you floor it and it goes nowhere? It's a very disappointing feeling.

9. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

   9   11:14pm Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   SFace says Nope, just ran through Q3 reports today, FX gains 3.2% in Canada and around 2.8% in Japan just off the top of my head. for the quarter ended Sep 30th. It was a weak weak recent quarter for the dollar. Ahem. The dollar index [S; dxy], which measures the U.S. unit against a basket of six major currencies, rose to 79.159 from 79.095 before the data and 79.022 in North American trade late Wednesday. The euro EURUSD +0.0142% slipped to $1.3098 from $1.3121 Wednesday.

10. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    10   11:16pm Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   everything says Still, last month or two, seeing new lows on bank rates I'd expect we had a storm of refinancing. 30-year fixed: 3.62% -- up from 3.59% last week (avg. points: 0.41) 15-year fixed: 2.91% -- up from 2.88% last week (avg. points: 0.28) 5/1 ARM: 2.72% -- up from 2.68% last week (avg. points: 0.40)

11. SFace Follow Befriend (2) 61 threads 1,302 comments Premium

    11   11:58pm Thu 18 Oct 2012   Share   Quote   Permalink   Like   Dislike   Goran_K says 0-year fixed: 3.62% -- up from 3.59% last week (avg. points: 0.41) 15-year fixed: 2.91% -- up from 2.88% last week (avg. points: 0.28) 5/1 ARM: 2.72% -- up from 2.68% last week (avg. points: 0.40) All that is within 12.5-25 basis point of the all time low. As of today, mortgage rates are near record lows, just a tad shit higher than two weeks ago.

12. SFace Follow Befriend (2) 61 threads 1,302 comments Premium

    12   12:27am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Goran_K says But also interestingly, mortgage applications dropped another 14% (they are already at 1995-1996 levels) Banks close on Columbus day. The adjusted index is at June 2012 level, whatever that means. My interpretations is sales will be pretty strong in Nov and Dec with around 8-10% YOY increase in sales volume

13. SFace Follow Befriend (2) 61 threads 1,302 comments Premium

    13   12:47am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Goran_K says - Sales volume dropped nearly 20% from August to September First, it's seasonal. Secondly, September homes sales represent activities in the field in July, August. That part is done. That's like saying Texas Rangers are the best team in baseball in Sep because they have the best record through July. Pending sales index will be much more useful predicting future sales. Oct 25th is the next release date.

14. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    14   7:11am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   SFace, I'm going to have to ask you to not use personal insults in this thread. I've deleted a few of your post already. Keep it civil. I don't mind disagreement, but don't take it to the gutter. You can restate your position on the dollar gaining (or losing) strength, but don't use personal insults or I'll delete it again. Thank you.

15. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    15   7:16am Fri 19 Oct 2012   Share   Quote   Permalink   Like (1)   Dislike   SFace says Banks close on Columbus day. The adjusted index is at June 2012 level, whatever that means. My interpretations is sales will be pretty strong in Nov and Dec with around 8-10% YOY increase in sales volume That might be true, but purchase mortgage applications have been down YOY for the past 4 years: This isn't some short term trend like you're trying to paint it, it's a reflection of how out of reach homes are in terms of price and "affordability" for the middle class.

16. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    16   7:22am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   War says Pending sales cratered nationally for September 2012. It's a long way down, price-wise. Yeah I was bullish on housing after Bernanke announced he would do QE infinity. But after seeing how the market actually reacted, it's like someone putting the accelerator to the ground in their car, and it only moving a few feet. Not exactly the reaction I expected.

17. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    17   7:24am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   SFace says First, it's seasonal. A 20% drop would be the biggest August-September drop in 4 years. I would have to disagree that the drop is purely seasonal.

18. bubblesitter Follow Befriend (5) 10 threads 2,329 comments

    18   7:46am Fri 19 Oct 2012   Share   Quote   Permalink   Like (2)   Dislike   Goran_K says Mortgage rates heading back toward 4%. Actually I see that as a good sign. This refi madness must stop to gauge the correct movement of the market. Cash in hand will come really handy as prices will head down with the spike in interest rates.

19. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    19   7:56am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   bubblesitter says Actually I see that as a good sign. This refi madness must stop to gauge the correct movement of the market. Cash in hand will come really handy as prices will head down with the spike in interest rates. The 10 year has risen month over month since July: That won't only have an effect on rates, but on investors who are seeking a less volatile investment. If it goes over 2 like I suspect, that could be another dagger into housing. 30 year fixed would go back to 3.75 or 4.00 par rates.

20. bubblesitter Follow Befriend (5) 10 threads 2,329 comments

    20   8:03am Fri 19 Oct 2012   Share   Quote   Permalink   Like (1)   Dislike   Goran_K says That won't only have an effect on rates, but on investors who are seeking a less volatile investment. Yes. Investors. Ideal situation would be to have them a feeling on less profit and market will enter into normal phase. Hell,I'll buy any property at any given day,that has not been eyed by an investor.

21. everything Follow Befriend (2) 3 threads 547 comments Madison, WI

    21   9:00am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   It really should not matter, the buying flurry has already occurred with the low rates, now you see lots of junk left on the market, while those who were treading water either refinanced or are still treading water. If the government is injecting 40 B a month via MBS, someone will get their hands on that money somehow, and buying will continue unabated no matter what the rates. Rate's don't matter all that much, we've proven that already, it's the unlimited credit that drives the market, so what prices may slide a bit to compensate, interest rates are not going anywhere for years.

22. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    22   9:00am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   bubblesitter says Yes. Investors. Ideal situation would be to have them a feeling on less profit and market will enter into normal phase. Hell,I'll buy any property at any given day,that has not been eyed by an investor. Well hedge funds are already jumping out of housing with the yields where they are now. I guess being a landlord isn't as profitable as people say.

23. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    23   9:01am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   everything says Rate's don't matter, it's the unlimited credit that drives the market, Didn't they try that already?

24. everything Follow Befriend (2) 3 threads 547 comments Madison, WI

    24   9:03am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Didn't they try that already? If you don't succeed the first time, try, try again?

25. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    25   9:10am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   everything says If you don't succeed the first time, try, try again? At $10 trillion a try?!

26. everything Follow Befriend (2) 3 threads 547 comments Madison, WI

    26   9:28am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   You guys just don't get it, the government is picking up the tab here. It's really no different than Solyndra.

27. David9 Follow Befriend (3) 28 threads 747 comments Tarzana, CA

    27   9:29am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Oh, it's the bear thread :) Didn't even get an email from Redfin today. No new properties 350k and under along the 101 corridor or Hollywood. I have come to the conclusion, at the moment, the only way to get a good deal in El Aye is at the courthouse steps.

28. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    28   9:31am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   everything says You guys just don't get it, the government is picking up the tab here. It's really no different than Solyndra. Solyndra is a drop compared to "trying" to create another credit bubble.

29. Mobi Follow Befriend 1 threads 241 comments

    29   9:43am Fri 19 Oct 2012   Share   Quote   Permalink   Like (1)   Dislike   everything says It really should not matter, the buying flurry has already occurred with the low rates, now you see lots of junk left on the market, while those who were treading water either refinanced or are still treading water. If the government is injecting 40 B a month via MBS, someone will get their hands on that money somehow, and buying will continue unabated no matter what the rates. Rate's don't matter all that much, we've proven that already, it's the unlimited credit that drives the market, so what prices may slide a bit to compensate, interest rates are not going anywhere for years. Question is where they use that 40 B. If I were a banker who dips a hand in it, I would go speculate the oil instead of purchasing junk houses. Easy money. This is similar to the fact that the treasury note rates actually RISES while Fed was officially using QEs to purchase the notes. The treasury rates only decreased BEFORE the QEs.

30. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    30   9:46am Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Mobi says Question is where they use that 40 B. If I were a banker who dips a hand in it, I would go speculate the oil instead of purchasing junk houses. Easy money. This is similar to the fact that the treasury note rates actually RISES while Fed was officially using QEs to purchase the notes. The treasury rates only decreased BEFORE the QEs. Someone who understands the dynamics of investing. Kudos.

31. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    31   4:31pm Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Well well well.... from today: The S&P 500 lost 1.6%. The Dow Jones Industrial Average dropped 205 points, or 1.5%. The Nasdaq posted the steepest declines, falling 2.2%. Quite a huge drop after earnings reports came out. Are we still in a recovery or going into recession again?

32. duckhead Follow Befriend 3 threads 81 comments

    32   4:47pm Fri 19 Oct 2012   Share   Quote   Permalink   Like (2)   Dislike   muahahaahaha with Bernanke at the helm all you doomers are DOOMED. With masterstrokes he guides the great NAR ship higher and higher into heaven taking all wise house buyers with him to money nirvana!!! The all powerful all knowing FED cannot fail to salvage this mighty economy levitating the stock market into a golden time!!!. GET READY TO PARTY SHOOBAZOOOO.

33. Goran_K Follow Befriend (4) 25 threads 1,518 comments Laguna Beach, CA Premium

    33   4:52pm Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Yup says Europe depression, China Crash landing, US recession/depression. Housing prices go up during depressions, really they do! Poor earnings reports, historically low mortgage application index, and 20% drop in sales volume month over month, I'm not sure that Ben can print the housing market out of the gutter. I mean he literally told the entire country he's going to put his foot down on the pedal connected to the printing press and the market responded by going into idle.

34. everything Follow Befriend (2) 3 threads 547 comments Madison, WI

    34   5:17pm Fri 19 Oct 2012   Share   Quote   Permalink   Like   Dislike   Thanks for educating me, but I thought the 40B MBS was for RE speculating, not the broader commodities market. It really should not matter, the buying flurry has already occurred with the low rates, now you see lots of junk left on the market, while those who were treading water either refinanced or are still treading water. If the government is injecting 40 B a month via MBS, someone will get their hands on that money somehow, and buying will continue unabated no matter what the rates. Rate's don't matter all that much, we've proven that already, it's the unlimited credit that drives the market, so what prices may slide a bit to compensate, interest rates are not going anywhere for years. Question is where they use that 40 B. If I were a banker who dips a hand in it, I would go speculate the oil instead of purchasing junk houses. Easy money. This is similar to the fact that the treasury note rates actually RISES while Fed was officially using QEs to purchase the notes. The treasury rates only decreased BEFORE the QEs.