Even a wish made on last week’s semi-rare “Blue Moon” – the second full moon in one month – couldn’t help Bonds shake off their own blues, worsening again for the fourth week in a row and causing home loan rates to rise by about .125%.
Why are Bonds experiencing so little love? Stronger than expected economic news driving investor money into Stocks and out of Bonds, and renewed concerns from the Fed about inflation. Let’s unpack the major headlines.
Last week brought the Fed “Meeting Minutes“, which give the behind-the-scenes talk amongst the Fed members from their last meeting. The commentary revealed that the Fed believes inflation, the arch enemy of Bonds and home loan rates, to still be “uncomfortably high”. And even though last weeks Core Personal Consumption Expenditure report showed year-over-year inflation at 2%, finally within the Feds target zone of 1 – 2%, it just wasn’t enough to help Bonds or home loan rates improve.
Additionally, the job market remains hot, as evidenced by the release of May’s Jobs Report, showing stronger than expected job creations of 157,000. A tight labor market can lead to more inflation, so for one more week, Bonds and home loan rates remained out of luck, and out of love.
– Patrick Dunn, Westwood Mortgage Inc. & MMG Weekly
patrick@westwoodmortgage.com