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Why Financial Markets don’t Follow the Old Rules Anymore

by Energy Burrito, Oil Price:

My favourite moment of the working day is doing a dot-to-dot. And it happens every morning, after booting up my computer; I look across the various asset classes, and start connecting the dots.

After the first few screens, it becomes progressively easier to predict what is coming next: dollar down = risk on, equities up = bond prices down, risk off = metals down. But joining the dots has gone askew recently. So from the starting point of mortgage rates to a crude conclusion, here’s how joining the dots isn’t as simple as going from A to B.

Whether financial markets float your boat or not, what is a useful thing to know if you have a mortgage, want to buy a house, or want to refinance, is the biggest influence on mortgage rates. And while logic dictates that a 30-year government bond would be a decent guide for a 30-year mortgage rate, that would be somewhat inaccurate. It is actually a 10-year treasury bond:

Read More @ OilPrice.com

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