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    Market Update – Interest Rate Insight

    Our Friends over at Guild Mortgage Co. have sent us this very insightful update regarding the stock and bond markets. THIS is exactly why NOW is the time to buy or refinance. Give us a call, or visit this link, for a free home valuation to get started on that process.

     

    Market Update | August 5th, 2019

    The US – China trade dispute is the key driver of the hits today to the stock markets and bond markets worldwide.    Over the weekend, China took steps to devalue their currency, which makes their exports cheaper for other nations to purchase, and undercuts the impacts of  US tariffs that otherwise would have raised the prices for US consumers  buying Chinese manufactured goods.

    President Trump tweeted this morning that China has manipulated its currency, which ratchets up the tension on this issue.  As both sides take measures to ratchet up pressure on each other, and both US and Chinese economies are being negatively impacted, this will continue to put downward pressure on worldwide stock prices, worldwide bond rates and on US mortgage rates.

    As these pressures ratchet up, the value to either side to strike a deal increases.   This makes stock and bond investors very skittish, as at any point, without any advance notice, positive news about trade talks could  hit the markets, and stock prices and interest rates could turn on a dime.     We will likely see very large swings in stock prices through the month of August, possibly some of the largest daily swings of the entire year.    At the same time, the continued trade tensions will put downward pressures on interest rates, but if a breakthrough does happen, we may see one of the largest one day increases in interest rates that we have seen all year.

    Bottom Line:

    We will likely have very volatile stock and bond markets this week and likely the whole month of August, before the tariffs begin to take effect in September.    If a deal is struck, we will likely see a large one-day increase in US mortgage interest rates, and large rallies in the  US stock market.

     

    – David Battany – Executive Vice President, Capital Markets – Guild Mortgage Company

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