As you can see, bonds have not seen this quick a drop in the last two years and, in fact, we have to go back over 10 years to see this quick of a change. Since mortgage rates move opposite of bonds, that equates to the quickest increase in rates.
This picture shows how well fear drives the markets as I have mentioned. As you will see, there is a large "hump" that formed just after Christmas. The reason for the rising portion was based on fears of a recession. The quick demise is based on fears of inflation. The in top was when the markets weren’t sure which fear was going to win.
(Pictures taken from the Mortgage Market Guide bond pricing page)
I knew it was only a matter of time before the Japanese Candlesticks made an appearance here.
Great post Robert.
Cliff diving.
Thanks Todd, and yes, you knew they would show up eventually. They do paint a better picture than words and Paul described it well.