Yesterday’s increase was significant enough to see a little bit of a pullback overnight. Plus the news is favorable today, such that a significant increase today isn’t anticipated. Overnight, Greece requested to amend the EU agreement on its bailout, citing too severe a set of restrictions, causing social unrest. This caused unrest in the Euro market, and money flowed into US vehicles.
This inflow (demand) caused the prices to stabilize yesterday’s rise, and held them from further yield increase (bond price drop). Plus 4% was attractive enough that several countries began to turn to US debt. Now, I wouldn’t necessarily be happy about this; with US 10 yrs trading at 3.94%, that puts us considered to be risky behind most every European nation with the exception of Greece, at 7.01%; UK, at 4.00%, and Italy, at 3.99%. Considered “less risky” are: Spain, 3.86%; France, 3.47%; Dutch, 3.38%; Sweden, 3.21%; Germany, 3.14%; and Swiss, 1.92%. Japan likewise is at 1.93%. Not a list that I would be proud to be at the top of.
So, one would hope that we’re at a relative ceiling. However, economic news was favorable yesterday toward recovery, thus trending higher long term: the ISM services index came in higher than expected (at 55.4 vs. 54.0 anticipated) and pending home sales jumped a record 8.2%. The general wisdom is that economy is heating up, and that it will take increased interest rates both for this expectation, and to absorb the the expected massive $2.43 trillion dollars of debt to be sold this year.
Once again, if you are in a variable-rate mortgage, now is the time to fix it.
