I'm not exactly sure why, but even though we WRITE as if we expect price action like today's to occur, and even though it is getting to be less and less of a surprise, it somehow has not lost any of it's intrigue lo these many weeks. If you take a look at yesterday's close you can see the exact same damn thing happened today as yesterday. (more...). Prices did an AM head fake as if the fundamental data were going to be important, but shortly thereafter, ranges and volatilities moderated and most everything held within a channel implied by the previous trend. Same story today:
You'll be able to see on tonight's closing commentary that we're now perpetuating our longest and most narrow period of sideways movement, since Xanax-like days earlier this year when the economy was still crappy and Fed-Buying still a new concept (all that to say the range was incredibly narrow and stable for an incredibly long time). Rate sheets might be worse these days, but at least we have a change to feel alive! C'mon! Yeah! Who's with me?! Oh.... Really? No one? You all just want better rate sheets huh?
Just remember that you can make money even if prices are going to get worse. Look, the market is going to do what the market is going to do, and if you are maximizing your efforts, you're going to get the loans you're going to get.... So in that sense, if you increase your hedge ratio (predisposition towards locking) when prices are reasonably higher than they turn out to be for the average of the next 30 days, believe it or not, you make money (it just doesn't feel as good). So, with that in mind, know this: despite anything else I'm seeing right now, I'd be more worried about downside than upside until we get through the band of prices at 100-10 to 100-13 and hold above there for 2 days.
Please don't take that to mean I'm pessimistic on prices. I'm not. But neither am I optimistic. Just as it was earlier this year, I find myself lobotomized by a lack of directional guidance, just like MBS.
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