Hippo Financial

We are closed for the observed holiday. Normal business hours begin tomorrow.

More volatility in rate markets, particularly in MBSs. Yesterday’s FOMC meeting and Powell’s press conference turned the 10 yr. from 1.67% back to 1.64% at the end of the session. MBS prices yesterday morning -30 bps, after Powell prices rebounded to +9 bps at the end of the day. Once again, the movement in rates happened late yesterday, at 8:30 pm ET, when rates began to increase, and the climb continued to 7:30 am this morning. The 10 yr. at 1.75%, up a whopping 11 bps and MBS prices at 8:00 am -42 bps from yesterday’s close. We noted a few days ago how most of the movement in US treasuries has been occurring after US markets close; it continued last night.

Inflation is the driver; yesterday, Powell made it clear the Fed wants inflation to increases above 2.0%, and even higher, the Fed will tolerate higher inflation for now on the premise it will aid economic growth. How is that? Simple, the more prices increase, the faster spending will occur. The moves came after Fed Chair Jerome Powell indicated he wasn’t concerned over the recent surge in long-term yields -- with his focus still on whether financial conditions remained accommodative. Futures volumes surged after the benchmark 10-year yield broke past 1.7%, giving way to another bout of selling. Treasuries were already facing modest pressure in Asian hours before flows accelerated at the start of the London session.

Not all the market believes that inflation will continue to increase, but that is what makes a market. Currently, that view is very much in the minority given the recent data on PPI, supply pressures getting goods to the shelves, and rising commodity prices. With the Fed ‘promising’ not to increase rates until 2023, it’s a green light despite a significantly brighter assessment of growth and higher inflation over the near term. No rate increases, but the Fed essentially admitted inflation is on the increase; check your gasoline prices as one area where prices are increasing. Try home prices, look at credit card rates, food prices.

This holiday season, I’d like to take the opportunity to reflect on a uniquely trying year. Our team and our families, like yours, faced new and untold challenges that continue to impact our professional and personal relationships. But during these times, we’ve built stronger bonds with our friends, families and loved ones. This holiday season more than ever, we celebrate what’s important and look toward brighter fortunes the new year will bring.

From our Hippo Financial family to yours, thank you for being a key part of our success in 2020. Have a happy holiday and healthy 2021.

Wishing you all the best;
Tom Malace

Please check out our new online loan platform allowing our clients to apply, lock, and close from their computer.

Hippo Financial – The Right Home Financing Solution for You Whether you are a first time home buyer, relocating to a new city, or upgrading to a larger home, our experts will work to find the best home financing solution for you.

Giving thanks to our staff, wholesale partners and account executives, and of course our CUSTOMERS that have made 2020 a blessed year.