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By G. Steven Bray
Mortgage rates hardly budged last week. This consolidation trend is a nice breather for folks who haven’t locked their mortgage rate, but it will end, and that end may come in the next couple weeks.
Remember that we’ve been saying non-existent inflation and weakening global growth are fueling low interest rates. Last week, a couple economic data points indicated inflation may be rearing its head. This week, we get the jobs report and several other important economic reports. Analysts are predicting just south of 200k jobs created last month. A much higher number typically would unnerve rate markets.
However, times are not typical. While the US economy hobbles along, the rest of the world is in the dumps. But this hasn’t changed in the last couple months, so why aren’t rates and stock prices still falling? I think it’s blind hope. Central banks from Japan to China to Europe have promised to create ever more stimulus programs to prop up their sagging economies. Even though none of the previous programs has salved the wounds, there’s no shortage of snake oil.
To that end, the European Central Bank meets next week. Markets may wait to break their current trend until they see what magic its wand wields. If it’s not satisfying, the market swoon may begin again.
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