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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (5660)	1/21/2004 10:52:45 AM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Refinancing applications From Brian Reynolds A small move in bond yields produces a big swing in activity After hovering in the low 2000 area since November, with a dip to the 1700's for the holidays, the Mortgage Bankers index of refinancing applications surged to 3327.3 last week. This is the first piece of data that covers the time period following the drop in bond yields that was caused by the soft payroll employment number. Last week, we wrote "If current yield levels hold, we would expect refis to rise to the 2500-3000 area in the next few weeks. Another 15-25 basis point drop in yields could push refi activity toward the 4000 level." So, this surge in refi activity was even stronger than we expected. It illustrates how we are in a yield environment where we are seeing large swings in prepay activity for relatively small moves in yields, and how close we are to the point where refis could climb again to historic heights should Treasury yields decline further. While this rate is far from the 9977 peak that we saw last May, it is still a historically strong number: prior to the refi boom that started in 2001, last week's level had been exceeded on only two occasions in the past, despite the generally declining nature of bond yields throughout the 1990's. Purchase applications also surged last week, rising to 501.6, eclipsing the all-time record of 459.9 set in November. ========================================================== Well someone has a vested interest in rebuilding this bubble. Let's see if that can pull it off. M

To: Jim Willie CB who wrote (5660)	1/21/2004 10:59:40 AM
From: mishedlo	Read Replies (2) \| Respond to of 110194

as long as all major currencies are rising versus the US$, interest rates here will be under pressure you dont see it that way The pressure is there BUT the pressure on others to cut is greater. Look at Canada. I called it in advance. Europe is next. This economy is looking weaker and weaker to me (in terms of jobs). Focus on the primary objective of the fed, not something they have stated they do not care about. I believe you will eventually be right, perhaps 7 years from now. Seriously. We are not going to see more than a token hike, and I say it is 50/50 that the next move is a cut. Mish