Rates Move Lower As Investors Seek Safe Haven
The most recent jobs report was not as good as expected, showing downward revisions to job gains in the two previous months. There has been an uptick in Chinese equity volatility which has bled into markets in the US. On Sunday, the proposed settlement offer between Greece and its creditors was shot down once again, creating more uncertainty surrounding the stability of countries in the Eurozone.
Finally, on Wednesday, the New York Stock Exchange unexpectedly shut down trading for most of the day, leaving most of the market to wonder if there had been some sort of cyber-attack from abroad.
While equity markets certainly took a hit, interest rates dropped as investors rushed for the safe haven of U.S. Treasuries. Since the beginning of trading on Thursday, we’ve seen the yield on the U.S. 10 year note drop from 2.47 percent to a low of 2.18 percent.
Mortgages also benefited from the so-called “flight to quality”, as average 30-year mortgage rates dropped to right around 4 percent. Average 15 year and hybrid adjustable rate loans fell as well to 3.2 percent and 2.93 percent, respectively.
This week also brought the market Federal Open Market Committee (FOMC) minutes from the June, where many Fed officials expressed concern about Greece. Additionally, several Fed officials voiced concern over the pace of growth in China. With the situations in Greece and China deteriorating this week, it would make sense that the opinions of the Fed officials haven’t changed much, particularly if coupled with the recent downturn in U.S. economic data. Overall, the Fed’s tone remained dovish and it will be interesting to see if recent events affect the anticipated rate hike in September.
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