Treasuries Take a Break

Good morning everyone!

The stock market is off to a hot start this morning with the S&P up over 2% and the Nasdaq up almost 4%. This is following a large decrease in 10 year treasury pricing.

Consumer sentiment regarding home purchases fell in February. 5% fewer people said is was a good time to buy a home compared to January and 20% fewer compared to February of 2020. This is at the same time that unemployment continues to fall and appreciation continues to rise. It will be very interesting to see how next months reading comes in.

As we have talked about a couple of times, year over year inflation readings in the months ahead are going to shoot up. This is because a year ago, at the very beginning of the pandemic, we saw negative inflation. While these high reading have reasons behind them, investors will see 2%+ inflation and flee the bond market. Having said that, it looks like current mortgage rates will be the lowest that we can expect in the near future. In 4-5 months when we see year over year inflation start to trickle down, then maybe we will see rates decrease depending on where the market is. Many economists project that rates in the 2’s are over and those who did not act most likely missed it in the near to midterm. We are holding a locking bias. People looking to refinance now need to make a decision to forget where rates were a couple of months ago and act now to lower their rate before inflation readings are over 2%.

Have an awesome day everyone!