11/04/2024
Market Update:
The Bond Market Tightens as Election Uncertainty Looms
Last week’s weaker-than-expected jobs report didn’t offer the bond market the relief many were hoping for. As you know, the Bond market moves mortgage rates. Instead, we saw a continued rise in yields as the market braces for what’s coming next. The benchmark **10-year Treasury hit 4.361%**by Friday afternoon, the highest level since July. With fears of inflation still looming, and the uncertainty surrounding the upcoming election has traders hesitant to make big moves this is making mortgage rates stay elevated.
The bond market seems to be sending a clear message: rates are likely to stay higher for longer. Inflation remains the bogeyman, driving up Treasury yields and pushing gold prices to record highs. This compounded by concerns that the next administration, along with new Fed policies, could exacerbate inflation even further.
So, what can we expect next week? Volatility. With election uncertainty still looming large, rates could cause rates to move in either direction.
The November Fed meeting is expected to be less dramatic than September’s jumbo cut, but traders are still betting on a 25-basis point cut this week, with a 95% probability according to CME data. Another 25-bps cut is on the table for December, but it’s not a sure thing. This again could cause rates to move in either direction. So be cautious when locking and floating rates. Anything can happen.
Meanwhile, Warren Buffett is quietly de-risking his portfolio, shifting out of tech stocks, and accumulating T-bills to the tune of $288 billion. His strategy of being greedy when others are fearful seems to be in play. Buffett’s moves could add downward pressure on stocks, signaling that he knows something we don’t.
All this sets the stage for another busy week in the bond market. With inflation still a concern and the Fed expected to tread carefully, keep an eye out for volatility in both directions. The Fed’s two-day December meeting may give more clarity to the ongoing bonds drama, but until then, the ride is far from over.
Dana Oatman, Realtor
