What goes down must come up! OK, so maybe the housing market still has a way to go before the media proclaims a full recovery, but for the day, rates have taken a turn for the better. The FNMA 5.5% Bond is up a whopping 50 basis points and that is a huge bounce off the lows from Wednesday. What is driving this comeback that rivals Sylvester Stallone in Rocky III?
Fear. Jobless claims are up. Housing starts are down. When investors operate in fear mode, the bond market does very well since they are guaranteed a rate of return. Which begs the question: What are people most afraid of right now? If you can answer that, then you can begin to understand the mind of the clients we deal with everyday.
Are they afraid of making a wrong decision? Of losing money? Of regret? What do you guys think?