Bonds love bad news, uncertainty and fear, which are causing rates to move lower.
This past week, the escalation of the coronavirus fears caused enough anxiety to push rates down to the lowest levels in U.S. history.
Here’s what we know: Mortgage bonds, which determine loan pricing, ticked to the best levels ever on Thursday, and the 10-year Note yield hit 1.25%, the lowest ever!
Here’s what we don’t know: what is next for the coronavirus or its impact on the global economy.
With that said, if the coronavirus story brightens at all and becomes less uncertain or better, we could easily see rates move up just as quickly as they moved lower. On the other hand, should the coronavirus story worsen deeply, we should expect rates to fall further.
Bottom line: with rates at the lowest level in our history and hinging on the status of the coronavirus outbreak, now may present the opportunity of a lifetime to either refinance or purchase a home.
Forecast for the Week
After last week’s packed economic calendar, this week will continue to provide key reports which include the most important economic reading to follow — the Jobs Report.
The markets will be glued to the headlines around the coronavirus to find out if it even impacted the labor market in February.
In addition to the labor market news, data will come from both the manufacturing and service sectors.
We may also hear from the Fed, who might hint at a rate cut as early as March to help combat the negative economic effects of the coronavirus. Remember, long-term bonds don’t necessarily like rate cuts, and they showed as much last year as mortgage rates actually ticked up after three Fed rate cuts.
Reports to watch:
- Manufacturing data will come from Tuesday’s national ISM Manufacturing Index.
- Labor market data will be delivered on Wednesday with ADP Private Payrolls, Thursday’s Weekly Initial Jobless Claims, and Friday’s government Jobs Report, which includes Non-Farm Payrolls, the Unemployment Rate, and Hourly Earnings.