Good Tuesday afternoon from your Hometown Lender,

Nothing good is happening in the markets yet again. Stocks worried about tariffs and bonds worried about inflation have both been down. The Dow started up 1300 pts and is now down 800 (a 2100 point turn around)

Rate sheets today are worse than yesterday (and yesterday was a brutal day for rates), and reprice risk today is moderate (meaning we could see more). There was never a clear indication it was coming, and there really isn’t any agreement on what caused it.

This excerpt from a Bloomberg article this morning sums it up as well as anything:

“Traders threw out a number of possible reasons for Monday’s whiplash: a market primed for a pullback after such a sharp rally; lurking concerns about tariffs stirring inflation or necessitating government stimulus; liquidations in favor of cash-like instruments; or even rumors that foreign owners, including China, were selling.”

We can’t forget that there was an early rumor yesterday that President Trump was considering a 90-day pause on tariffs and that bonds sold off FAST with the 10-year yield taking off like a rocket, rising 15bps in 5 minutes before the White House came out and labeled the report “fake news”. Bonds never recovered.

So, after watching bonds plummet, we should see a rebound today… right?

WRONG! Don’t expect bonds or rate sheets to recover, not with the complexity of what we are dealing with right now in markets. In fact, both the 10-year yield moved higher, and mortgage bond pricing moved lower this morning (both bad for rates). Treasuries and mortgage bonds for the moment, are no longer the safe haven play.

Stay safe and make today great!