Thursday, May 6, 2010

FOR THOSE THAT QUALIFY: 30 Year fixed Rate 4.75%
20 Year Fixed Rate 4.5%
15 Year Fixed Rate 4.25

MARKET UPDATE : Update 3:35 p.m. - Here in a nutshell what happened to create the stunning whipsaw price action in the stock, bond and mortgage backed securities market this afternoon.

The biggest intraday point drop ever in the Dow Jones Industrial Average may have been caused by an erroneous trade entered by a person at a big Wall Street bank, according to multiple market sources. The so called "fat finger" trade apparently was made by an exchanged traded fund that holds shares of some of the biggest and most largely held shares in the NASDAQ.

In essence instead of entering a trade to sell 100 shares, someone entered a trade to sell 1,000,000 shares. The size of the trade immediately triggered selling by computerized trading platforms and individual investors in both the NASDAQ and the DOW - ultimately resulting in an intraday plunge of more than 950 points for the Dow Jones Industrial Average before calmer, cooler heads prevailed and the DOW closed down a relatively mild 347.8 points.

If it weren't for the enormous amount of panic this event caused in the financial markets - I think this would be a great scenario for one of those Southwest Airlines - "Want to get away?" - commercials.

The dramatic swoon in the stock markets this afternoon produced such a gigantic surge in buying demand that it outstripped by multiples the available supply of safe-haven instruments like Treasury obligations and mortgage-backed securities. When demand reaches panic levels - price soars - and it certainly did in the credit markets this afternoon. As the panic subsides - so do prices.