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What a 24 hour period on the bond for the mortgage backed securities. Several Days ago the bond market was whipsawed by the statements made by Senator Schumer. During the next 3 hours interest rates on the 30 year fixed fell to 6% and depending upon the loan size some loans were locked at 5.875%. This knee jerk reaction is what Wall Street likes to call a “Flight to Safety.� When there is panic in the markets, safe money is parked short term in bonds and so as the money fled from stocks, it went into bonds and we saw the prices rise and the yields (interest rate) fall. As with any sharp movement like this the following day you can expect a correction to occur or in some cases simple profit taking. The next day began that way as demand dropped and rates started to rise and then Citi announced their cash infusion and the correction continued throughout the day.

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