Mark Leaver, Mortgage Broker (photo) Click Here For Email Contact Form Friday: a better than expected reading on employment numbers is helping stocks and hurting bonds. Following bond yields like a puppy, mortgage yields (also know as mortgage rates or mortgage pricing) inched higher. Bond investors tend to "flee" upon any hint of good economic news, the theory being a good economy begets inflation, and inflation is the bane of bond investors. Because a bond investor seeks an income stream of fixed payments, those fixed payments are worth less in an inflationary environment and the bond investor demands more. A simple analogy is a child's allowance. If a child is getting $10 per week but the price of soda goes up due to inflation, the child will want more money to satisfy his or her soda habit. The same holds true in the bond market ... the bond investor wants more income if his or her purchasing power is expected to erode. When bond investors want more income, what they're really saying is: give me more yield, which is a fancy way of saying: give me a better rate. We saw it happen this morning, and it happens to a varying degree every trading day of the year. Have good weekend - Mark Fatal error: Call to undefined function: close() in \\boswinfs02\home\users\web\b1701\ez.mleaver\maxmind_location.inc on line 327 | ||||||||||||||||||
