Jan 122017

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By G. Steven Bray

Interest rates have pulled back a little from their recent highs. While that’s welcome relief after the post-election rise, it begs the question are rates going to continue rallying lower, or are they merely catching their breath before pushing even higher?

One thing seems clear to me. Markets were caught up in somewhat irrational exuberance after the election, which led to the 3/4 point jump in mortgage rates. Sure a Trump presidency is likely to be more business friendly, and sure an expanding economy could lead to higher interest rates. But, seriously, we know very little about the policies his administration will pursue, and many of those that have been mentioned, such as infrastructure spending and tariffs, may take years to develop.

I think the recent pullback is an acknowledgement of that, and it leaves markets struggling to find direction. The world still is a scary place, and the Trump administration is still a bit of an enigma. Given this, rates can get pushed around from day to day based on headlines and trade-flows. Overall, I think it’s more likely we’ll see lower rates than for rates to start rising again; however, I doubt it will be a straight line. If you want to bet on lower rates, pick a bail out point when you’ll lock if the market starts to move against you.

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