WEEKLY MARKET UPDATE December 1st, 2024

Mortgage bond prices impact home loan rates. The chart below shows the one-year view of the Fannie Mae 30-year 5.0% coupon. Prices have recently risen, lowering rates to their lowest levels in over a month. Looking at the right side of the chart, you can see how prices have jumped higher out of the sideways trend, lowering rates to their lowest levels in over a month.

In the financial markets, short sellers bet on rising interest rates by selling bonds they don’t own, hoping to repurchase them at a lower price. An unexpected improvement in interest rates recently led to falling bond yields, putting many short sellers in a tough spot. They had to buy back bonds to exit their positions, which further drove rates. We'll receive critical labor market updates, including the November Non-Farm Payroll Report, which will clarify the state of the labor market following last month’s weak data. Fed Chair Powell has noted that a cooling labor market would be unwelcome.

Early in the week, it was announced that Israel and Hezbollah agreed to a cease-fire. This was very welcome news; hopefully, we will see Mideast tensions continue to ease. Typically, the excellent news would hurt the bond market and interest rates. However, this news also helped push oil prices lower, which bonds favor for their disinflationary effects.

Interest rates made great strides in attempting to stabilize from the steep selloff that started in September. However, with the new Administration and fiscal policy not starting for nearly two months, expect continued volatility with potentially large interest rate swings.

Let’s make this holiday season a time of celebration and growth! Feel free to contact me with any real estate questions or advice.