Mortgage rates are priced slightly better this morning.
The robots have officially taken over. Yesterday’s temporary 1,000 point drop in the Dow Jones Industrial Average is still being investigated. I for one don’t fully comprehend what happened yesterday and I’m not sure anyone does. The talking heads on the financial radio and TV are citing system glitches in trading platforms, problems with trading algorithms, and/ or human error. I look forward to picking up a Barron’s over the weekend and learning more about it.
According to the Bureau of Labor Statistics the US economy added 290,000 jobs in April and only 66,000 are being credited to census hiring. This is much better than analysts had been expecting and ordinarily we’d see rates move higher on this news.
However, uncertainty and volatility are the two major themes in the financial markets right now. The bottom line is that there is a wide divergence of opinions on how the sovereign debt crisis will impact our domestic and global economy. When this degree of uncertainty exists investors trade in “risky” assets for traditionally “safer” ones. This is the definition of a “flight-to-quality” trade and currently interest rates are benefiting.
I will recommend a floating bias headed into the weekend. However, it’s not a bad idea to book our gains and lock in.
Current outlook: floating bias