The Veridian Blog

Unless you were in another galaxy, the Fed decreased the Fed Funds and Discount Rate three days ago in a surprise move that sent bond prices soaring and pushing the benchmark 10-year note to 3.25% - the lowest in nearly 5 years.  No-cost rates on some programs were hitting the 4.0% range - stuff we haven't seen since 2003 or 2004.  We could not make calls fast enough.  Wednesday morning things improved even more after another huge selloff in the equity markets. 

Then the world turned upside down. 

The Dow index made a 600 point reversal igniting a huge shift of funds that prompted investors to dump Treasuries and send yields skyrocketing.  Some wholesalers increased their rates as much as 5 times Wednesday afternoon and continued the surge all day Thursday as the Treasury Deparment unveiled its Economic Stimulus plan.  When the dust had settled, rates had shot up an unbelievable 0.75%-1.00% in a mere 24 hours. 

It's tough to forecast what will happen now.  We believe the general trend will continue downward but in this extremely volatile market, all bets are off. 

Stay tuned for more, as next week brings the Fed meeting and another possible rate cut...