Treasuries' fall starting to pressure mortgage rates

The rotation out of US treasuries (that we discussed earlier) is starting to pressure the broader market. Money is now moving out of agency paper as well, impacting mortgage bonds. Mortgage paper has been relatively stable until now (see chart below) driven by the Fed's aggressive buying. But "quantitative easing" is no longer having the desired effect.

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Expect mortgage rates to jump in short order. That is starting to spook the equity market as a potential head wind for the supposed "green shoots".