Skip to Main Content
Carrington Mortgage Services, LLC
Skip to Main Content

Europe Pain is Bonds Gain

October 16, 2020

Last Week in Review: Europe Pain is Bonds Gain

U.S. Bond Market = Safe Haven
Last week, investment dollars around the globe flooded into the U.S. Treasury market as a "safe haven" against growing uncertainty in Europe. Germany, France, and other European countries are seeing record levels of COVID-19 cases and have to decide on if and how to shut down parts of their economy.
At the same time, the European Central Bank (ECB) has not yet shown the willingness to add even more stimulus.
As a result of these bad times in Europe, Bond yields fell further into negative territory with the German 10-year Bund yield falling to -.64%, the lowest since March, and near all-time lows.
The decline in European Bond yields pressured our Treasury yields lower, from .79% on Monday to .69% on Thursday.
Not All Bonds Are Created Equal
The decline in Treasuries doesn't mean lower home loan rates. Home loan rates come from the pricing of mortgage-backed securities -- which didn't improve this week along with Treasuries -- so mortgage rates didn't improve either.
It's Not All Bad and Uncertain
Despite the growing uncertainty abroad, here in the U.S., we continue to see solid economic reports, strong consumer spending, and corporate earnings. And on top of that, a large stimulus package is coming. Along with a stimulus package comes three things Bonds don't like:

  1. Added supply of Treasury notes and Bonds to be sold
  2. Increased inflation fears
  3. Aid to the U.S. economy

Bottom line: Rates are at all-time lows and may not be here for long.

CAREERSINVESTORSABOUT USCORRESPONDENT

Equal Housing Opportunity An Equal Housing Opportunity Lender. Copyright 2007 - 2024 . Carrington Mortgage Services, LLC headquartered at 1600 South Douglass Road, Suites 110 & 200-A, Anaheim, CA 92806. NMLS ID # 2600. Toll Free # 800-561-4567. All rights reserved. Restrictions may apply. All loans are subject to credit, underwriting and property approval guidelines.  Nationwide Mortgage Licensing System (NMLS) Consumer Access Web Site: www.nmlsconsumeraccess.com.

The content of this website is intended for licensed third-party originators or brokers only and may not be duplicated or disseminated to the public. Carrington Mortgage Services, LLC is one of the leading wholesale mortgage lenders.

Government Agency Approval | FHA Non-Supervised Mortgage Approval #: 24751-0000-5 | VA Automatic Lender Approval #: 902324-00-00

linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram