Recovering Rates

Wow, it has been a wild ride since the last days of March. We have seen rates as volatile as they've been in months, and just over the last 5 market days, settling into a recovery.

Why, and what does it mean. I think we can point to a combination of factors, not just one in particular. Arguments floating around include the notion that the bond market participants(traders and such) expect weaker than expected corporate earnings. Right there would explain the recovery.... flight from risk, think fixed income investments, a nice safe return (Americans are all to aware of the pains of falling stock prices and/or below expectation earnings disclosure). Others feel that the bonds markets are deriving their strength from the FED stance and their pointed verbiage on rate policy and anti-inflation, another excellent point to consider......Or,perhaps rates jumped because the notes backing the interest rate market were "perceived" risky, and not unlike lemmings into the sea, did the traders get carried away, and we are now seeing the correction of their over-exuberance? I think it is safe to say, it is a combination of all these factors!

With that said, our mantra has always been float at the lows of the market and lock at the highs. The last weeks have seen some recovery and we are now tickling the highs of the market...it's time to lock! If you are in contract but floating, a 30 day lock might be a good call, at this point there is more to lose if you guess wrong with market direction. Bear in mind, you are not the only ones looking to secure the best rates, or in the case of hedge funds or other market participants...profits, and with the highs being approached, I think it is only fair to assume that there will be profit taking! Till the next market update, look sharp, these rates could be gone by the end of the week.