Election Week Was a Win For Mortgage Rates

Heading into the presidential election, there were significant risks for mortgage rates and a wide range of potential outcomes. We knew there would be volatility either way, and we were right!
Volatility goes both ways.  Heading into the election, the bond market (the biggest driver of interest rates) was defensive.  That means rates (aka bond yields) were heading higher.  Shortly into election night, however, yields began to drop precipitously.  It wasn’t until Friday that a strong jobs report and a few additional political developments brought some weakness back to bonds.
Why are bonds moving the way they’re moving?  The consensus is that a democratic sweep would have resulted in the guarantee of bigger stimulus in January and more spending in general.  In turn, government bonds would be used to pay for that stimulus.  The higher the issuance of government bonds, the more upward pressure on bond yields/rates, all other things being equal.  Moreover, if that stimulus proved effective in helping the economy bounce back, it would only add to the upward rate pressure (stronger economy = higher rates)….(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
Source: mortgagenewsdaily.comNew feed