Geopolitical/Financial Issues
There is no economic data coming today that we need to be concerned with. That leaves the bond market to focus on geopolitical events. The uncertainty of energy costs and inflation from the Iran conflict, that obviously is going to continue longer than initially thought, is fueling the global bond sell-off. Furthermore, President Trump’s request for $200 billion to fund the war will likely push our deficit higher, meaning more Treasury debt will need to be sold to cover it. This has the benchmark 10-year Treasury note yield at its highest level since last July and mortgage rates at their highest point since last fall. Unfortunately, without an end in near and some well-respected bankers predicting oil costs going much higher from today’s level, we may see rates move higher before coming down.