A massive selloff in bonds today has 10-year yields reaching the highest level since 2011. The main driver for the selloff was seeing the ISM Non-Manufacturing indicator spike from 58.5 to 61.0, signaling a potentially very strong Q3 and Q4 GDP for the US economy. I think a lot of traders are trying to get out of the way of a possible (and looking more and more likely) very strong employment report on Friday. The 10-year broke resistant at 3.11% today, currently trading at 3.16, so I think it’s fair to say the sub-3.00 range we’ve enjoyed for so long is broken. Mortgages are getting pounced on too right now with the current coupon currently down half point and looking to get worse. We’re in unknown territory now. We will have to see where rates end up later today and at market opening tomorrow. It’s always best to have your clients consult with their lender, but it may be prudent to consider locking in those rates now.
In times like this, I always recommend that buyers refresh their pre-approval letters to make sure there has not been any material change in their buying power.
IN OTHER NEWS
Stocks surge after NAFTA announcement
The risk-on trade was heightened over the weekend with the NAFTA 2.0 announcement. Stocks around the globe are soaring with the DOW up 242 points out of the gate.
Bonds move lower than expected
Mortgages have nearly risen back to pre-Friday selloff levels and the 10-year is down to 3.06% after only rallying two basis points to 3.08% after the NAFTA announcement. The NAFTA announcement is just one of several headlines that show de-escalating trade tensions around the globe – the landscape looks a lot better than it did in early summer.
What to watch for
This week the markets will continue to focus on follow-through from last week’s FOMC rate hike as interest rates settle in to a new home range.
Courtesy of Sotheby's International Realty's in-house Lender Simon Atik, 310.880.8414, Simon.Atik@grarate.com, Vice President of Mortgage Lending, Guaranteed Rate Affinity.
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