A combination of low supply, great rates, slowly improving credit availability, and high demand has home prices soaring relative to expectations. Is this too much of a good thing?
Source: Kevin Litwicki Universal Lending
New Home Prices Smash Record: Good or Bad?
Making Sense of Lower Mortgage Rates Despite Fed Rate Hike
The relationship between “Fed rate hikes” and mortgage rates can be confusing at first glance. After all, mortgage rates moved lower in the days and weeks following the past 3 Fed rate hikes. While they aren’t necessarily repeating the same pattern this time around, mortgage rates were nonetheless unfazed by this week’s Fed hike.
Source: Kevin Litwicki Universal Lending
Making Sense of Lower Mortgage Rates Despite Fed Rate Hike
Absence of Drama Lifts Rates From 2017 Lows
Mortgage rates are driven primarily by the bond market. Bonds can be a safe haven for investors if there are high-risk events on the horizon, or if headlines create a spike in uncertainty. If events pass without too much drama, and if uncertainty ebbs, investors move money back out of bonds, thus pushing rates higher. That was this week in a nutshell.
Source: Kevin Litwicki Universal Lending
Absence of Drama Lifts Rates From 2017 Lows
Jobs Report Adds Fuel to Fed's Fire
Last week’s newsletter was all about the Fed Minutes, which showcased a fairly detailed strategy for reducing the size of the Fed’s balance sheet. It was generally more rate-friendly than investors expected. This week’s jobs report added fuel to the fire.
Source: Kevin Litwicki Universal Lending
Jobs Report Adds Fuel to Fed's Fire
Markets Cheer Fed's Reinvestment Plans
Although markets entered the week on the lookout for more political headlines, it was the Fed that ended up taking center stage. The Minutes from the early May Fed meeting contained important details on the Fed’s plan to slowly decrease the amount of bonds on its balance sheet. This ended up being good news for both stocks and bonds. Here’s why…
Source: Kevin Litwicki Universal Lending
Markets Cheer Fed's Reinvestment Plans
Political Headlines Send Rates to 2017 Lows
Last week, mortgage rates were just beginning to break the upward trend that’s been in place since mid-April. Without much on the event calendar, it was unclear what this week would do to confirm the breakout. Unexpected political headlines quickly became the focal point, sending shockwaves through the entire financial market and confirming the rate breakout.
Source: Kevin Litwicki Universal Lending
Political Headlines Send Rates to 2017 Lows
Rates Quickly Reconnecting With Old Flames
When it comes to interest rates, there are only a few quintessential sources of inspiration: the economy and the Fed. After entertaining a complex cadre of new suitors in recent months, rates finally seem ready to reconnect with those familiar old flames. This week, that turned out to be a good thing.
Source: Kevin Litwicki Universal Lending
Rates Quickly Reconnecting With Old Flames
Markets Still Juggling Multiple Sources of Inspiration
Multiple sources of inspiration continued vying for the market’s attention this week with no clear winners. Stocks remained fully locked in the same indecisive pattern that emerged last week. Rates, on the other hand, may be starting to choose a side.
Source: Kevin Litwicki Universal Lending
Markets Still Juggling Multiple Sources of Inspiration
Politics and Policy Put Markets Back on The Fence
Heading into last weekend, financial markets were eagerly waiting for the results of the French election as well as more info on the Trump administration’s tax reform plan. While the market reaction wasn’t much of a surprise, it leaves us in an uncertain position heading into next week’s Fed announcement.
Source: Kevin Litwicki Universal Lending
Politics and Policy Put Markets Back on The Fence
For Markets, Political Spotlight Shifts From US to Europe
In last week’s newsletter, we discussed a series of wild cards hitting the table and the resulting impact on financial markets. Specifically, the potential reversal of post-election optimism helped interest rates break below 2017’s narrow range. But that was just one small example of much bigger uncertainty. Sooner or later, markets will have to decide what’s most important and trade accordingly.
Source: Kevin Litwicki Universal Lending
For Markets, Political Spotlight Shifts From US to Europe