As we inch closer to the upcoming presidential election, it is becoming increasingly apparent that economic data might not have as much of an impact on mortgage rates as previously thought. Lenders are adopting a defensive stance, causing rates to remain stagnant until after the election. This waiting game is frustrating for those looking to secure a rate or close on a property. The outcome of the election appears to be overshadowing any economic indicators at the moment.
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Biggest Presidential Election in Years
- The upcoming election is highly anticipated, with a lot at stake for the economy. While the markets have seemingly priced in a Trump victory, the impact of either candidate’s win on 10-year bond yields remains uncertain. The election outcome will play a crucial role in shaping the direction of mortgage rates moving forward.
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Bond Yields Are Higher Because the Worst of Everything Is Baked In
- Bond yields have incorporated the worst-case scenarios in recent times, factoring in various uncertainties such as the election, government spending, and economic data. The climb in 10-year bond yields reflects the cautious approach of investors who seek compensation when purchasing government debt. Despite the weak jobs report, bond yields have continued to rise, indicating a preoccupation with other market factors beyond employment data.
- Mortgage Rates Could See a Relief Rally
- With a lack of positive news in recent weeks, there is potential for a significant relief rally in mortgage rates. Similar to market trends, once a downward trend reaches its limit, there may be a reversal. This could provide an opportunity for bonds to bounce back and for mortgage rates to experience relief. Clarity post-election results could trigger a shift in the defensive trade, potentially causing a decline in bond yields and subsequently mortgage rates.
In conclusion, the coming weeks hold promise for a possible turnaround in mortgage rates. As the election dust settles and economic data regains prominence, there is hope for relief in the mortgage market. Despite the current uncertainties, there is anticipation for a positive shift in rates post-election. Stay tuned for updates on this evolving situation.
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