The markets are wrestling with two issues this morning. The first is worries about the spread of the new Omicron strain of COVID and the second is the high inflation rates and the political pressure on the Fed to potentially begin tapering sooner. These two issues would have opposite impacts on bond prices, particularly MBS prices, which is why the MBS markets have been very volatile this morning, moving over 50 basis points in price in less than an hour. Fed chair Jerome Powell is testifying in front of Congress this morning and is getting tough questions related to inflation and when tapering will happen. Market investors are trying to reconcile two opposing forces. The first is the fears of the Omicron strain driving business shut downs, which would cause the normal price pressures when bad economic news occurs, pushing down stock prices, pushing up bond prices, and pushing down interest rates. The opposing force is if the Fed is forced to taper their daily bond buying stimulus sooner due to the high inflation rates which are creating political pressure on the Fed. A sooner tapering would have the opposite market price impact and would push down bond prices, specifically MBS prices. In other news today, home prices increased to record levels in the third quarter of this year with the FHFA index showing an 18.5 percent annual rate of increase. FHFA officially announced the 2022 loan limits of $647,200 for one-unit properties, with higher limits for 2-4 units. Curious what this means for you, as a homeowner or homebuyer? Learn more here. In the bond markets, MBS prices are presently close to flat to this time yesterday, but have been volatile all morning. The yield on the 10-year Treasury bond is 1.441% and has moved up as high as 1.523% earlier this morning and has made almost 10 basis point yield changes in less than 30 minutes. The Dow Jones is presently down 1.76%, the S&P 500 is down exactly the same at 1.76 % and the NASDAQ is down 1.97%. | 
