12/22/2023
A look into the markets! - For the week of Dec 25, 2023
🎄 Santa Claus Rally Hits the Bond Market! 📉🎅
What's Happening?
While stocks often get the spotlight, this year it's all about bonds spreading Yuletide cheer! 🌟
Let's dive into the key highlights from last week and look forward to the final trading days of the year. ⏳
Crazy 8's
🏠 30-year mortgage rates soared to 8% in late October - a century high!
Since then, bond rates have been dropping for 8 straight weeks. 📉
Why the Sharp Decline?
Lower inflation 📉
Hopes that the Fed will stop hiking rates 🛑
Easing labor market 🛠
Drop in oil prices ⛽
Global recession fears 🌍
Israel/Hamas conflict and uncertainty ⚠️
3rd Quarter GDP Report
U.S. GDP rose to 4.9%! 📈 But...
The focus is on the future, not the past. The 4th quarter is expected to slow to 2.7%. 🐢
This slowdown suggests the Fed might cut rates next. ✂️
The Magic Number: 3.84%
If the 10-year Note yield finishes under 3.84%, rates will end lower than they started in 2023. 😲
Bottom Line
The bond market ends the year strong, with interest rates back to where they started. 🔄
Unlike this year's rate hikes, cuts are expected in 2024. 🔜
Looking Ahead
Next week might be quiet, but watch out for Treasury auctions that could sway rates. 🚦
Keep an eye on the economic calendar for more updates! 📅
Economic Calendar Insight
🏡 Mortgage bond prices affect home loan rates.
Check out the chart below showing the Fannie Mae 30-year 6.5% coupon. 📊
📢 Stay tuned for more updates and insights as we wrap up the year! 🎉