Market Commentary 4/21/17

Interest rates have moved lower. Combined with geopolitical anxiety and a persistently weak economic expansion, these factors have juiced the U.S. bond market this week. Treasury Secretary Yellen has recently remarked that a sweeping tax overhaul plan is nearly ready and the U.S. equity markets rallied on this news. Her statements have reassured the markets this week. Government and mortgage bonds remain attractive with the U.S. 10-year Treasury trading under 2.25%.

Bonds have benefitted from recent geopolitical trends. Fears of a possible Marine Le Pen election and potential “Frexit” have been spooking the market. There is a lack of certainty over how this will impact the Euro. This extreme move would have major global economic and geopolitical repercussions and may be one reason U.S. yields have dipped. Thankfully, the U.S. has engaged China to help calm down the situation in North Korea, and news out of Syria and Afghanistan has been quiet since the U.S bombings a couple of weeks ago.

From a technical standpoint, interest rates have not been able to break through lower resistance bands. Therefore, we remain biased toward locking in loans at these lower rates, especially given that most economists and even the Federal Reserve continue to discuss the justification for higher interest rates given the current state of the U.S. economy.