06 Mar Bond Yields Continue to Fall
The chaos continues this morning with stock investors once again selling hard. Based on the yields on the 10-Year Treasure Note, it seems the panic in the market is far from over. The current yield on the 10-Year is now down to 0.72%, which is the lowest level ever seen in history. A drop in this yield generally reflects investor sentiment. As the yield moves lower, we can assume a massive “flight to quality” where money is flowing out of the stock market and into the safe haven of bonds. As more Coronavirus illnesses are reported in the US, I believe we will see investors hesitant to jump back into stocks. With the longer term impact unknown, low rates could be around for a while.
This morning’s Bureau of Labor Statistics (BLS) report showed that new job creations in the month of February were strong. While the market was anticipating a number in the 177,00 range, the actual report showed that there were 273,000 new hires. In addition, there were 85,000 added to the prior two months’ reports. To add to the strength of the report, the Unemployment Rate fell from 3.6% back down to 3.5%. Since this report was before the Coronavirus panic, the report should almost be thrown in the garbage. Although many were ill from the disease, the stock market was setting record high levels in the month of February. We will have to see what the March report shows. I anticipate the hospitality and entertainment industries to take a massive hit. Since they have been a shiny part of our job growth, this is not good for our economy.
Based on the performance of the bond market, there is once again no reason to immediately rush to lock. However, since mortgage rates offered in the market are also impacted by supply and demand, there is actually upward rate pressure on mortgage rates. This comes from a level much higher than the retail level, so there is little that can be done by mortgage companies.
Remember, pigs get fat and hogs get slaughtered. Don’t miss out on a great opportunity in hopes of saving a few more bucks down the road.