In effect, Mortgage Bond pricing was bucked off yesterday and then barreled down through the 200 day average price–a floor of sorts. The sell-off continues in earnest this morning. The stimulus seems to be a stabilization in the European economy, particularly in Greece, which actually reported a modest gain in inflation yesterday. The instability in Greece of late was one of the reasons interest rates have been under 4.0% for the last six months as investors the world over seek a safe haven for their money. So a turn around abroad will siphon money from our funding pools in the U.S., putting upward pressure on yields to keep the cash in circulation. Additionally, a hint of inflation anywhere decreases the value of a given bond, and calls for the issuance of higher yielding assets. READ: interest rates are higher this morning.
