Just a quick post this morning to let you know that the FNMA benchmark bond is rebound a bit - just like I thought it might. It sold off fairly strong from Tuesday through Friday and with no data this morning, investors might see this lower price as a buying opportunity. The bond is currently up 21 basis points.
A few tips about the interest rates and what drives them
The biggest drivers of interest rates are economic data and geopolitical events. It's important to remember that bonds are considered safe havens so when there is bad economic news or scary things happening in the world, investors usually sell out of stocks and put their money in bonds. Bond prices and rates move inversely to one another so when traders / investors are buying bonds that pushes the prices up which moves rates / yields lower.
As we slog through this economic recovery, investors are looking at the various economic data releases to try to get as much information as possible about the direction of the economy and whether they should get aggressive, pull out of bonds and buy stocks or be safe and buy bonds. The other side of the coin is that the stock market has had a nice run-up and many analysts are calling for a 10-15% correction which would mean that many equity investors may decide to sell stocks and buy bonds which would be great for rates and sometimes these things become self-fulfilling prophecies without any real economic data driving it.
There's a lot that could happen this year with rates and even if we end up in the low 5% ballpark, they would still be very good. That said, any increase in interest rates decreases buying power which means less home for potential buyers. The time to buy is now - let's make it happen.
It's also a great time to refinance!! I can help with either of these things.