Wednesday, January 16, 2019
Mortgage interest rates are based on the supply and demand of mortgage bonds. Bonds depict interest rate movement and they move in opposite directions. When bond prices decrease, interest rates increase. When bond prices increase, interest rates decrease.
What’s going on and why does it matter?
Mortgage bonds are drifting sideways and lower as market sentiment seems caught between Brexit uncertainty and China stimulus prospects. Regarding Brexit, British Prime Minister May is facing a no-confidence vote later today following yesterday’s resounding defeat of her Brexit deal by the British parliament. She is expected to prevail on the vote and remain Prime Minister. Regarding China, their central bank injected a record $83 billion into the country’s financial system as it attempts to maintain liquidity and support the economy. In the meantime, the partial US government shutdown is now into its 26th day with no apparent resolution in sight. Some economic reports this week will be delayed due to the government shutdown, including today’s retail sales and business inventory reports.