17 Dec Housing Market Flexes its Muscle
Stocks are once again enjoying new all time high levels. As has been the story many times in 2019, record high stock prices are taking their toll on the mortgage bond market. This strength in stocks works as a headwind for the bond market and will generally drive mortgage interest rates higher. However, I’m continually impressed with the resilience of the bond market. Overall, mortgage interest rates have held up exceptionally well under the pressure. If this strength can at least hold rates where they are now, it will be a blessing. It’s hard to say how much longer this stock rally will last. But like all things, it will eventually come to an end.
We received several reports on the housing market. Overall, the news was overwhelmingly positive. This is encouraging as we head into the slower housing market months of winter. If rates stay low, we could be set up for a strong spring when the time comes.
The euphoria over the trade deal seems to be fading, as pundits and commentators are now less focused on the agreement being good news for the stock market. Overtime, this mood like likely continue to settle in. At which point, I expect President Trump to begin rhetoric surrounding a new deal that he will likely be working on. This could keep stock investors happy, as hopes of continued deals sparks optimism in our economic future.
There remains little to celebrate in the bond market. We will maintain a locking bias.