Good News For Mortgage Rates
The widely followed CPI inflation report pleasantly surprised investors, creating a much-needed positive aftershock for bond yields and the stock market.
Here’s What Happened:
1. The 10-year treasury yield fell nearly 30 basis points to 3.81%, the largest drop in one day in more than 20 years.
2. The stock market finished today with the most robust rally in two years, climbing 1203 points. The Dow rose 3.7%, while the Nasdaq was up 760 points or 7.35%.
Why it’s Good for Mortgage Rates And The Real Estate Market:
Lower bond yields translate to lower mortgage rates, which have basically doubled this year. Just today, rates dropped a quarter-point lower, depending on the product. There is a reasonable possibility that if the PPI inflation report comes in with a mild number next week, we could see lower rates start to change momentum and all the negative sentiment in the market.
As I have said for the past month, we are in the eighth inning of this higher-rate environment.
The steadier stock market we saw today will help buyers and sellers off the fence because it eases fears that the economy is in trouble.
California’s Economic Strength
Speaking of economies, last month Bloomberg News hinted that California may overtake Germany to rank as the fourth-largest economy in the world when the data comes out in 2023.
California isn’t only resilient, but poised for further growth. For this reason, buying real estate here is and always will be one of the best investments one can make.
Sincerely,
Mark Cohen