Daily Market Update 11/15/10

Mortgage rates have moved higher by about 1/4% since last Wednesday after the Fed began purchases of Treasury securities under its new “quantitative easing” program. Investors wanted to sell a much larger quantity of Treasurys than the Fed was purchasing, so a rush to sell pushed yields higher. Anticipation of the Fed’s program had pushed rates down to the lowest level in decades. There has been strong opposition to the program from other countries and from many US politicians and economists, including some within the Fed, meaning expansion of the plan is unlikely unless the economy falters. It may be difficult for mortgage rates to hold near record lows, and investors have been selling mortgage-backed securities on this outlook. In economic news, October Retail Sales rose 1.2%, beating forecast. The Producer Price Index will be released tomorrow and the Consumer Price Index will come out on Wednesday.

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