The Veridian Blog

There’s not much anyone could have done last week to stop the train wreck that is now the U.S. stock market. Panic selling put a choke hold on all the major indices resulting in one of the worst percentage and point losses in generations sending recession-laden tidal waves around the globe. Meanwhile, as if things couldn’t get any worse, flighty investors wouldn’t even touch the Treasury market, as is normally the case when funds are moved out of equities and into the safer bond arena, and apparently opted instead to convert billions of funds to cash. By Friday, mortgage rates moved up approximately 0.50% to further add to the morose sentiment on Wall Street. When and how this liquidity crisis ends is anyone’s guess right now, but the immediate concern should be when sellers are going to stop the most recent round of fear-based trading.

Well, a sliver of light did shine through on Friday when buyers made a brief appearance and this morning, they have come out in full dress. For the time being, it seems as if the dust is settling and that perhaps we have already hit a bottom. The bond market is closed today in observance of Columbus Day, but it will be interesting to see how mortgage rates react tomorrow and whether equities can sustain a prolonged rally.