Morning Report - Yes the 10 year is trading with a 1 handle

Vital Statistics:

	Last	Change	Percent
S&P Futures	1852.9	-43.9	-2.17%
Eurostoxx Index	2933.5	-67.5	-2.25%
Oil (WTI)	81.47	-0.4	-0.45%
LIBOR	0.231	0.001	0.26%
US Dollar Index (DXY)	85.3	-0.520	-0.61%
10 Year Govt Bond Yield	1.95%	-0.24%
Current Coupon Ginnie Mae TBA	107.3	0.4
Current Coupon Fannie Mae TBA	106.6	0.4
BankRate 30 Year Fixed Rate Mortgage	4.13

Markets are getting hammered this morning on global economic weakness. Bonds are flying.

Bonds are on fire this morning. The 10 year is trading below 2% level, and European bond yields are posting new lows. The German Bund now yields 73 basis points. Oil is getting smacked and the stock market futures are down hard. 

Look at the chart of the 10 year yield - it is simply collapsing:

LOs should be pinging borrowers about refinancing. This rally could be a huge gift. Look at possible VA IRRLs. 

Retail Sales fell .3% in September on falling energy prices. Ex autos and gas, they still fell .1%

The Producer Price Index fell .1% in September. Ex food and energy, it was flat. No inflation anywhere.

Mortgage Applications rose 5.6% last week. Purchases fell .7% while refis rose 10.6%. The 30 year fixed rate mortgage fell to 4.2%.

Not to sound Cassandra-ish, but when bond yields are collapsing like this, it is often a signal that something is very wrong in the plumbing of the financial system. Bonds simply don't behave like this on a weak inflation number or a downgrade of Germany's economic growth by 50 basis points. 

I'll conclude with this observation:  Bond yields are at these levels without much in the way of QE any more. We could have gotten these yields without the Fed buying 3.5 trillion worth of assets?