If you’ve been following the news lately, then you’ll already know that the financial market has had a lot of interesting twists and turns. It primarily stems from the trade war with China and fears of another recession on the horizon. The Federal Reserve and central banks worldwide have continued to drop rates based on these factors, especially when it comes to Treasury bond yields.
Significant Market Drops
This week, we saw the Dow plunge 800 points (the worst decline it’s seen in 2019) to a two-month low. Likewise, the 30-year Treasury bond yield went below 2% for the first time in history. The 10-year Treasury note and the 2-year Treasury yield also dropped to the lowest levels they’ve been in years.
Graph courtesy of CNBC.
This is happening because investors have sought out the safety of U.S. government bonds as traditional stocks continue to drop in value. In addition, what’s known as the “yield curve” has also been on an inverted downward trend. This inversion has been a fairly reliable indicator of economic recessions in the past.
“The 30-year yield in itself is historic given that it is moving to massive lows but the curve inversion is typically the signal,” says Stephen Suttmeier, technical strategist for Bank of America. “it’s one of the better signals you can get that there is increased risk of recession.”
Significant Market Drops
The U.S. has placed tariffs on $300 billion in Chinese goods. As the trade war and negotiations continue, investors seek out assets that are expected to hold their value or increase in worth. This may include Japanese yen, gold and of course government bonds. This increase in buying bonds have pushed the Treasury yields down to these record-low levels.
As I covered in my last article, this has created a unique opportunity in the mortgage market because the interest rates have dropped so low with the China trade war. People looking to refinance their current home loans are benefitting the most and taking advantage of these current market conditions. We don’t know how long this period will last. For now, things are great for home buyers and especially refinancers.
Get Started on Your Home Loan or Refinance
With market conditions as they are, now is certainly the time to apply for a home loan or refinance. The Transparent Mortgage team is here to help you get the best mortgage terms, lock in a great low rate and get the most out of your home loan. Call us today at (619) 701-3906 or email me at firstname.lastname@example.org for more information or to get started with your loan application.