The Bond market is sharply higher (rates down) today, more as a function of news elsewhere; but the trend is strong. In part, the boost is due to a stock downturn, as the SEC charged Goldman Sachs Group, Inc. with fraud related to its subprime mortgage history. Bad news in stocks will often cause “flight to bonds.”
Additionally, the Greece situation continues forefront in the market, as the negotiated details remain in flux, and the IMF informing Greece to “brace itself for the International Monetary Fund’s conditions for granting a bailout package.” This, with the economy well below it’s potential, and inflation subdued (quoted from San Fran Fed President Janet Yellin) is all working in the favor of higher demand for bonds today.
Even so (and although it usually works to suppress bond prices), on the domestic front, housing starts are higher: up 1.6% to an annualized 626,000 last month (as compared to a previous 575,000 for February.) But again, as I had discussed yesterday, the key is inflation expectations. Some of this housing increase is due to the break in cold weather, and expiring tax credits. As good news for us in Florida, this increase was concentrated in the South, which showed an 18% surge. I remember an article years ago (in Kiplinger Reports, I believe) that projected that the decline would be led by Florida (as it was), but that the recovery would also be led by Florida. If you happen to know anyone who is doing a purchase, and needs a mortgage in Florida, I would be grateful for this referral, as this is the work that I do.
Technicals also support bull pressure for today, as stochastics are trending higher, and will reinforce a higher move, particularly if resistance levels are taken out. The close above the 9-day moving average is also a positive short term indicator of trend.
If you have the ability to float, continue through today, and pending other breaking news—especially anything regarding inflation. Common belief remains that rates will still trend between 3.7%-4.0% for the foreseeable future.
For any who would like to sign up for our “alert to lock” text messages when the news warrants, click the “SMS Alerts” link at the top of the page, and email us your information; and we’ll add you to the alert list.
