Mortgage Bond Market Analysis - Halloween Eve

The mortgage bond market has been frightfully calm over the last week and a half and the volatility is nothing more than a ghost of weeks past; it could be lurking just around the corner ready to put some fear into us should the economy show more significant signs of improvement.  Since October 15th when the benchmark FNMA 3.5 closed at 103.8, we are down to 103.45 two weeks later and trading in a very narrow range.  October 15th and a couple of days after that provided us with some MASSIVE volatility which resulted in some wild price swings but since then the market has been eerily calm.

The geopolitical landscape has calmed down along with economic news that hasn't been earth-shattering in either direction.  I think that the bond market is tip-toeing through the alley hoping not to stir up any ghosts or goblins - of course, some would say the same of the economic recover which is a main reason why we are where we are as far as interest rates are concerned.  Here is the current bond chart:

The slide in the stock market played a part in the run-up for the benchmark bond through the 15th and then a minor recovery in the stock market in addition to some stabilization in the geopolitical climate (including some calming of the nerves regarding Ebola) has factored in to the recent decline of the benchmark bond.

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