What’s Happening in the Financial Markets Today?

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Filed under: Market Comentary

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If you’ve been paying attention to the financial markets today, you know that it’s been a rollercoaster on Wall Street. I checked the trends right before filming this video, and the Dow was down over 600 points. This is my 3^rd week in a row talking about interest rate topics because so much has been happening that could affect real estate and mortgage rates.

2-Year and 10-Year Treasury Inversion

This morning is unique because the yield curve inverted temporarily this morning. What this means is that the relationship of the 2-year treasury and the 10-year treasury flipped. Usually, investors receive a better yield from a long-term investment. But for a brief moment, the 2-year treasuries offered a better yield than the 10-year treasuries.

This is the first time we’ve seen it happen since 2007, and we saw a recession the following year. I’m not saying that today’s market trends mean that a recession is coming. None of the market experts are indicating that we are on the brink of the severity of the recession that was experienced in 2007/2008. But it is interesting to look at historical trends and see that any time these two treasuries inverted, it appears that there is a correlation between the inversion and an impending recession.

No Need to Fear

Only time will tell what happens in the market. I realize that I need to be careful with what I say because I don’t want to mislead anyone to believe that the fallout of 2008 is going to happen again. My intention for sharing this information is because it’s something to watch out for, and the inversion explains why the markets are going crazy this morning.

Remember that treasuries are not directly related to mortgage-backed securities. But it is good news, temporarily, for the mortgage market and how it affects interest rates for home loans and refi’s.

If you’re thinking about buying or refinancing, then right now is a great time to have a conversation with our team here at Franklin Loan Center. Call me at any time if you have questions about the best financing solutions for your needs. I’m here to help!

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