My Mind on Mortgages

Last September I wrote this article for my newsletter in which I introduced my readers to the Irving Fisher’s equation of exchange which reads MV=PT where M= money supply, V= velocity of money, P=price level, and T= quantity of goods and services transacted (real Gross Domestic Product [GDP]).
The thesis of the article was [...]

If you are a reader of this blog’s ‘rate update‘ posts then you may be wondering why attention is paid to the US Treasury and their biweekly auctions.  The reason has to do with an economic principle called the “crowding out effect“.
According to Wikipedia ‘crowding out’ is “any reduction in private consumption or investment that [...]

I’ve covered the topic before on ‘rate update‘ but I thought I would write a small blurb this morning because the WSJ had an interesting article on the topic.
As you may be aware the US sells a lot of it’s debt to foreign investors around the world.  When I say “debt” I mean US Treasury [...]

The WSJ published results from a survey they did on Thursday and Friday of last week which shows that all 18 of the primary dealers that underwrite US Treasury auctions believe yields will be higher next year.  Here is a chart with the results:

The average forecast for the 10-year treasury was 4.125% which is about [...]

A “flight-to-quality” trade is not the latest comedic duo out of New Zealand but it is an important concept when it comes to tracking mortgage rates.  I will do my best in this post to explain what it is and how it impacts long-term mortgage rates.
“Flight-to-quality” is sometimes also referred to as “flight-to-safety” which is [...]

For most people today’s news that Australia has lifted it’s key short-term interest rate for a 3rd-straight month is of no importance.  After all, you probably don’t hold any Australian deposits or aggressively speculate in foreign currencies.
However, if you’re shopping for a home or considering a refinance this morning’s headline is more news worthy than [...]

The WSJ reported today that Norway’s central bank has joined the central bank of Australia in raising their short-term interest rates.  Clearly these two countries have navigated their way through the credit crisis better than others.  So why should you care?

When foreign countries raise interest rates they create higher yielding investment opportunities for investors relative [...]

The Fed announced today that they would keep open market operations in the mortgage-backed bond (MBS) market active into early 2010.  This is great news for mortgage rates.  There had been growing speculation that the Fed would discontinue the TALF program which has been credited with keeping mortgage rates near historic lows as the eocnomy [...]

This article appeared in the WSJ over the weekend.  It examines the impact that “slack” in the economy is having on curbing the inflationary pressures of money supply.
A couple weeks ago I posted this piece in which I wrote about Irving Fisher’s equation of exchange.  When you solve for price level (a change in which [...]

Here is a preview of an article I am releasing in an upcoming newsletter to my past clients:

It was Irving Fisher who contributed the equation of exchange to the world of macroeconomics. This equation states that MV=PT, where M= money supply, V= velocity of money, P=price level, and T= quantity of goods and services transacted [...]