Mortgage Interest Rate Market Guide

No graph today. Per Mortgage News...

Yesterday was brutal. The long end of the rates market got caught with its pants down. Short swap positions in the long end of the curve capitulated, forcing long Treasury positions in the "rate sheet influential" side of the curve to be liquidated IN SIZE. This pushed more debt inventory into a market (TSY longs stopped out) that was already flush with supply. We call this "selling down the ladder". Seller offers were there, buyer bids were not....no one wanted to catch the falling knife. Selling led to more selling. The 5 year note auction came....more supply for the market to soak up...demand was weak, the street had to step up to support the Treasury (street = dealers) and selling led to more selling and higher benchmark yields.