Market volatility on the rise, bringing rate increases

<p><span style="font-weight: 400;"><strong>Snapshot report:</strong> Thirty Capital Analyst Jay Saunders says market volatility will continue as tapering draws near. T</span></p> <p><span style="font-weight: 400;">The Ten-year was up to about 1.70 last week, before dropping a bit. Tapering is expected to be sooner rather than later, but it’s not likely to be an aggressive taper as was first predicted. </span></p> <p><span style="font-weight: 400;">With the next Fed meeting set for next week, it’s expected that tapering will be formalized, beginning with bonds first. </span></p> <p><span style="font-weight: 400;">Tapering should be complete in around six months, with one rate increase forecast for 2022, and then two in 2023.</span></p> <p><span style="font-weight: 400;">Jay notes that the one-month LIBOR is still pretty consistent, just shy of nine bps. One-month BSBY is just shy of six bps. </span></p> <p><span style="font-weight: 400;">SOFR, which is probably where the lion’s share of LIBOR-based contracts are going, dropped a bit and is back to three bps. Accordingly, one-month SOFR has dropped to 4.3 basis points.</span></p> <h1><span style="font-weight: 400;">Cap prices are increasing</span></h1> <p><span style="font-weight: 400;">If you are borrowing variable rate short-term products, and are looking to hedge via a cap or potentially a swap, stay on top of those rates. Cap prices in the three-year range have almost doubled in the past couple of weeks. </span></p> <p><span style="font-weight: 400;">With policy making, Analyst Jason Kelley says with the current House and Senate, there’s no negotiating - it’s all what can get pushed through at the last minute. </span></p> <h1><span style="font-weight: 400;">Processing pipeline is full</span></h1> <p><span style="font-weight: 400;">Within the industry, Jeff says market volatility means their processing pipeline is as full as it ever has been.</span></p> <p><span style="font-weight: 400;">“The whole industry, from our processing side, is backed up. We've got thes