Did anyone else see the TIC report this morning?
This is interesting to see. It is showing what kind of holdings foreign entities have in the United States debt market. These are reported in "millions" so a number like "8,000" means eight thousand millions...or 8 billion.
Take a look at the European Union's holdings as a total reported for March VS February: 66 billion vs 8 billion of our debt purchased. This supports the idea that there is a flight to safety from holdings over there to holdings over here. This represents just money from over there...but doesn't illustrate that idea that there are also many U.S. investors putting their money back here at home vs. overseas.
The comment though: This is a temporary move. All this money moving into our markets is simply a "flight to safety" and will ultimately be placed somewhere else again when things start feeling "safer" again.
In other words, the money moving into the market is only a temporary fix until things get sorted out. It could all leave just as rapidly. Remember when 60 billion dollars moved into the oil futures market and then back out almost as quickly in 2008? Similar effect: Mortgage backed securities were tanking and investors needed something they could earn a decent return on with relative safety. (Again, maybe just a real stretchy dotted line...but just as an example.)
SO: We will see lower rates in places like Bozeman Montana and other U.S. Markets for Mortgages in the short term, but we need to watch out for the day that all that money flows back out of our bond and securities markets. It will happen quickly most likely and will could see rates pop up over a day or two of deterioration in the markets there.
-- Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com
