Mortgage rates hit new 2014 low as 30-years fixed rates dropped to 4.21% from 4.29%. Last time rates were this low was last November when the 30-years rate hit 4.16%.
Concerns about deflation worldwide along with a move to the so-called safe harbor have helped keep rates on US Treasury bonds low. But investors need to be asking themselves: Could this be the quiet before the storm?
Most started the year expecting rates to rise and bond prices to fall as the Fed rolled out its tapering program. A lot of investors got caught on the wrong side and just may get caught again if rates go up faster than expected. As we noted in a quote from macro trader Paul Tudor Jones recently the obvious isn't always obvious.
Many investors have been expecting a pullback in this market for a while. It hasn't happened yet. Few thought energy and utility sectors would hold up this well. In late December last year Forbes ran an article, '3 Standout Sectors for 2014." http://www.forbes.com/sites/tomaspray/2013/12/26/3-standout-sectors-for-2014/ Energy and utilities didn't make the list. Technology was one of the sectors that did make the list.
Much of the volatility investors expected in 2014 also hasn't shown up yet. And how many anticipated the turn around in bond prices for those EU periphery countries like Greece and Portugal? Anyone really believe they've found economic religion?
How many expected ECB Pesident Mario Draghi, the dragster, to wait so long to depreciate the euro still trading near $1.39. Draghi's done much talking but showed little action. Now he's waving the month of June in investors' faces. Maybe we need to change his sobriquet from dragster to muddler as it seems he keeps hoping this thing will cure itself.
In the meantime, we expect to see the euro closer to its true value $1.20
http://money.cnn.com/2014/05/08/news/economy/europe-ecb/index.html?iid=SF_BN_River
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