Mortgage Rates Getting Blasted!
Posted On: June 5th, 2009 by James Posted In: Mortgage Rates
Mortgage rates continue to spike in this first week of June. Since the bond market slipped early last week, we’re now about a full percentage point higher on 30 year fixed rates. Why is this happening? I’m not sure, most indicators did not prepare me for what we now have, and a big part of me feels like this is an irrational swing. There has been a lot of optimism, and a new appetite for risk in the marketplace. This appetite, is pulling traders out of their bond positions and into the surging equity markets. When you combine this with the US Treasury also FLOODING the bond market with over 100 BILLION dollars of new debt issues, you can see where this is going. One piece of slightly good news is that the Treasury has announced that they will greatly scale back future debt issuance in coming weeks which should provide some brakes on this potentially runaway train.
Also, many experts see the surge in the stock market as a “Bear Market Rally” which means, this will not be sustained and we will go back to test some lower territory soon.
The silver lining to this massive thunderhead is that what is happening in the bond market can be seen as a sign of overall economic health for America. So once the shock wears off I’m sure I’ll get way happier! I hope you’ve all been continuing to fund your 401K’s throughout these earlier lows.
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