Here are key points that are promoting volatility to the bond and mortgage markets, this week:
–10 year bond yield hit 2.56% today–highest level since March of 2017
–China weighs slowing or halting purchases of U.S. Treasuries–They hold $3.1 trillion–largest foreign holder of debt. Cost of debt would increase if they were to re-trench from this market.
–U.S. trade tensions cause concern for trade war–Canada is raising odds to over 50% that U.S. will exit NAFTA. U.S., Canada and Mexico currently trade more than $1 trillion annually. Cost of good could increase based upon arguments for things like software, aerospace, timber, and more. Trade accords keep costs and tariffs down.
—Market might already be positioning for worse inflation data to be released on Friday
–When markets deviate from perceived views, you get changes (volatility).
According to bond guru, Bill Gross, there is a prospect of rising bond yields, perhaps yield of 2.7%-2.8% this year. With a margin of approximately 2%, interest rates may rise to high 4% to low 5% range.
Best execution for a 30 year fixed rate loan today, was approximately 4.25 to 4.375% for a zero point loan.
If you have any questions, give me a call.
Darryl Stolz, NMLS#247836