Weekly Economic Summary
Tuesday, November 15th

Last weeks' surprise results lead to some unusual triggers for the financial markets. Except for a brief after-hours plunge in Index futures trading that was fully reversed within 90 minutes after the post-election market open the Stock Market has signaled all clear and traded to new all-time highs.

Bond Markets have not been so sanguine and have been continuing to price in Federal Reserve rate hikes and eventual normalization of interest rates starting in December. Consequently, if you have been watching Mortgage Rates closely over the past few months you will have seen rates have increased by as much as a quarter of a percentage point in a short time. Ugh!!!

The likelihood for a December interest rate hike by the Federal Reserve is also very high (see chart below).

Accordingly, U.S. 10 Year treasury bond yields have jumped in the last week to price in this expectation as well (see chart below).

However, they may be making themselves a relative bargain in the short term when compared to alternative investments such as the S&P 500 Dividend Yield and that may be the silver lining in all this if they catch a bid and bounce back.

Mortgage rates have not moved up by nearly as much as U.S. 10 Year Treasury yields have and this gives hope that rates can stay low for longer and consumers still have time to capture historically low rates before they normalize further.

We are at historical lows in interest rates and time is of the essence.

We do not know the future, but this period of super-low interest rates and unprecedented monetary policy moves may be coming to an end and "normalization" of the yield curve may be at hand. This would be a good time to lock in your Rates!!!