The bond market has been quite impressive of late in its ability to confuse pretty much all watchers. The professionals come from two schools of thought with regard to their opinion. Last week we were having an economic recovery and rates were on the verge of rising aggressively. This week, maybe not as much recovery but rates are starting to fall.
Opinion 1: The government is running up huge deficits and financing those deficits will cause rates to rise dramatically, and soon!
Opinion 2: The economic recovery is not “normal and healthy” yet and though we are improving, it will be a long slow climb from here. Slow economy equals lower rates.
Obviously rates are neither falling nor rising aggressively until this all gets sorted out. Add in Ben Bernanke getting nominated for a second term in charge of the Fed and we have a recipe for confusion.
The advice here for Chicago area homeowners and homebuyers is to “lock ‘em if you got ‘em”. Rates are unlikely to get dramatically better anytime soon based on the economy and if the traders go on vacation until Labor Day, you could see a big rate rise in a thin trade.
