05 Jul If you float, watch the market carefully……
The bond market opened up after an extended weekend with the 10 Year Treasury Note yield falling to new all-time lows. Prior to today, the record low for the 10 YTN yield was 1.39% which was set in July of 2012. However, it is now sitting at 1.37% and will likely see lower levels before too long. This historic move lower was triggered by a continued drop in the value of the British Pound, which is now below a three-decade low. The continued repercussions of Great Britain’s historic vote to leave the European Union will likely provide headwind to global economies for months and even years to come. There will be a period of adjustment followed by times of rapid movement in the markets as the realities of change filter through the mindsets of investors.
For now, the threat of a Federal Reserve interest rate hike is off the table. This is providing the US bond market with the much needed comfort it needs in order to continue increasing in price. This is great news for mortgage interest rates, as the markets move in opposite directions of what many economists predicted.
This will be a heavy news week, highlighted by Friday’s Bureau of Labor Statistics’ Jobs Report which will announce the number of jobs created within the US economy in the month of June. Given the recent disappointing numbers, all eyes will be watching to see if the downward trend continues. We will talk more about this in coming market update reports and outline the expectations.
Since we are now in unchartered waters, it’s difficult to predict the near term direction of interest rates. The bond market is doing very well at the moment, so there is no need to immediately rush in to lock. However, only float if you are able to watch the markets closely. Sentiment can reverse quickly.