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Uncertainty Helps Rates

Last Week in Review:
Uncertainty Helps Rates


Bonds love uncertainty and bad news, and as a result, rates improve when not-so-good news emerges.

That was the story this past week, as China has reported a new deadly coronavirus has started to spread in their country. At this point, the virus, which spreads through human contact, has taken several lives and has affected hundreds.

A known case in the U.S., several Chinese cities quarantined, and uncertainty over what happens next with the virus has the financial markets on edge.

In response to the uncertainty, many investors around the globe are placing their money into the relatively safe-haven of the U.S. dollar and U.S. denominated assets like Bonds -- which has helped home loan rates improve to the best levels in three years.

If the virus gets contained quickly and doesn't spread further, the modest improvement in rates this week could reverse very quickly.

At the same time, should the virus story get worse and become even more uncertain, we should expect Bond prices to climb even higher, helping home loan rates even further.

Bottom line: with home loan rates now touching the best levels in three years, anyone considering refinancing or buying a home would be wise to take advantage of what may be a brief further improvement in rates fueled by the coronavirus uncertainty.