Courtesy of Brian Page, Guild Mortgage
With the surprise election victory for now President-Elect Trump, we have seen a very volatile reaction in the stock and bond markets. The good news goes to the stock market as stocks have seen very nice gains today. The bad news goes to the bond market. They have seen a tremendous sell-off today. With a drop in the price of bonds comes an increase in their yields. Today we’ve seen an increase in yields of roughly 1⁄4%, meaning we are heading to that 4% 30 year fixed rate mark we haven’t seen since this time last year. It appears the markets have built in a Fed increase of at least .25% in December as of now.
The balance of the week and into the next week may give us a glimpse into what happens next, but for now the bleeding likely isn’t quite over as these types of sell-offs are rarely one day events. Expect some additional volatility and perhaps a smoothing out of market direction sometime in the next couple of weeks as the markets begin to build an idea of the next administration’s fiscal policy and the potential on both the economy and inflation.
The bottom line is we are still going to have very attractive rates for the near term. While that may or may not have a ‘3’ in front of it for a 30 year fixed rate; we will still have an interest rate environment that fuels home purchases. Stay tuned.
