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Quiet Ends: The Weekly Market Update

Quiet Ends: The Weekly Market Update
McLean Mortgage

Saber Rattling

Saber Rattling

Last week we spoke about the Dog Days of Summer when things are expected to be quiet. On the other hand, we also indicated that the world does not take vacation in August and unexpected events can have a greater affect upon the markets when so many are on vacation. And so it is with regard to the North Korean situation. Thankfully, thus far this is not an event, but a heightened course of saber rattling threatening all sorts of things.

Of course, we were all hopeful there would be no event, and that the sabers would quiet down. But we have seen more volatility in the markets as a result of all of the noise. And the events in Europe late last week just added to the consternation. Even so, the drop in stocks has been miniscule as compared to the rally we have witnessed over the past nine months. Even without these events, one would be quite surprised if there are not more mini-corrections in store for the markets because of how far they have moved to the upside.

Another area affected by the noise is interest rates. It is hard to tell whether the recent moderate drop in long-term rates is due to a flight to safety in anticipation of a possible crisis, or a reaction to the news that the economy continues to grow along with reports that are showing inflation continues to be contained. With the markets, we never know why they move, and in this case the easing of long-term rates could be a result of several factors. The move could also be quite temporary. Thus, if you are house or car shopping, you may only have a small window of opportunity.

The Weekly Market Update

Last week 30-year fixed rates were slightly lower, continuing a trend which started four weeks ago. For the week ending August 17, Freddie Mac announced that 30-year fixed rates fell one tick to 3.89% from 3.90% the week before. The average for 15-year loans decreased to 3.16%, and the average for five-year adjustables moved up slightly to 3.16%. A year ago, 30-year fixed rates averaged 3.43%.

Attributed to Sean Becketti, chief economist, Freddie Mac — “Following a mild decline last week, the 10-year Treasury yield rose 1 basis point this week. The rate on 30-year fixed loans similarly remained relatively flat, falling just 1 basis point to 3.89 percent.”

Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.