Market commentary

As expected, last week’ turbulence in the global bond and stock markets brought a wake-up call to the European Central Bank. Over the weekend the governing council of the ECB along with the International Monetary Fund and the Group of 8 (the largest global economic powers) decided on a “stabilization plan”, meaning the ECB will be buying sovereign and private bonds in the open market. This is the same strategy the Federal Reserve used and is being implemented today.

This plan and the accompanying actions, coupled with Friday’s strong employment data have had the desired effect on the markets. The Euro currency is rallying, global stock markets are skyrocketing, and bonds, especially U.S. Treasuries are swooning. The yield on the 10 year note has risen .15% to 3.55%, and mortgage rates are rising as well. The good news is that so far today mortgage bonds are performing better than treasuries, so don’t let this opportunity to lock at a low interest rate slip away!