In this week’s Master the Markets, host and expert Bill Bodnar reports from Warsaw, Poland, following a difficult week for bonds. Treasury yields climbed to their highest levels in years and moved close to 5%, but the market found some relief on Friday and resisted breaking above that critical threshold.
The latest CPI inflation report came in slightly hotter month over month, increasing speculation that the Fed could raise rates on Wednesday. While a rate hike might sound negative, Bill explains that a stronger response to inflation could help preserve the value of long-term bonds and potentially ease pressure farther out on the yield curve.
The decision itself is only part of the story. Mortgage professionals should also listen closely to the Fed’s message if rates remain unchanged and watch for any announcement involving the balance sheet. Oil prices are another key variable after falling several dollars heading into the weekend, providing additional relief for bonds.
