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

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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

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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

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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

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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

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After spending nearly 6 months in the same narrow range, interest rates finally made a move LOWER this week, much to the chagrin of the prevailing narrative calling for “higher rates in 2017.” At the same time, stock prices have been in their most persistent downtrend since the election. All this has investors wondering if the “Trump trade” is beginning to unravel.
Source: Kevin Litwicki Universal Lending
Rates Hit 2017 Lows as Wild Cards Hit The Table

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