Bond trader for a living.
@SouthFayetteFan I see you on the SBA loans. I’m a buyer of SBA pools that have securitized those loans you are underwriting. Don’t make it difficult for me parsing through loan tape and underwrite some solid credit please
10-year Treasury took it to the teeth for sure the last week or so, but more in rally fashion depending on perspective. For buyers of the 10-year, sub 1%, not so much. As an example, I rotated the majority of my 401K into fixed income back in January, and this rally across Treasuries has been beneficial.
30yr mortgages are tied to the 10yr Treasury. Shorter term mortgages are benched closer to the 5-7yr depending on tenor.
The Fed has no choice but to cut, and the market is pricing in additional cuts. Won’t be surprised to see us back at zero rates at least for the short term, but certainly not the 7 years we experienced. With fed funds well through the 10yr Treasury, there is absolutely zero incentive for institutions to issue credit or invest. Until there’s more bang for buck to invest in a 1% 10yr as an example over parking the cash at the Fed riskfree at the prevailing rates, they have to keep cutting unless there’s a pullback in treasuries, which has certainly priced in any contraction far faster than equities or credit assets in general.
This post is sounding more and more like an finance rant than a DIS post...
To make it relevant, DH gets to drink from the cup again