Bond Market Update

Market Update

Monday, May 20, 2019

What's going on and why does it matter?
Mortgage bonds opened flat this week after backing down slightly from their recent highs. Risk appetite in the financial markets is still muted on US-China trade tensions. The latest headline is that Google is suspending some of its business with Chinese company Huawei following their blacklisting last week by President Trump. More companies are likely to follow, and China is expected to retaliate in some measure. Meanwhile, Brexit remains in chaos and there are escalating tensions in the Middle East between the US and Iran. All this points to continued pressure on stock prices, with mortgage bonds potentially benefiting from the "flight to quality" trade. The economic calendar is light this week, and the highlight will likely be the minutes from last month's Federal Reserve meeting, which are scheduled to be released Wednesday afternoon.

What should you do about it?
Watch for mortgage bonds to remain in positive territory above their 10-day moving average, but be prepared to lock your rate quickly if mortgage bonds fall below that level.

Economic Calendar

Economic reports that may impact mortgage rates this week: