I'm the blog.

Feel free to read our awesome blog.
Read Blog Latest Post

Mortgage Rundown: Stock and Bond Price’s Effect on Rates

A person checking stock market data on a mobile device.

Today we are going to talk about what’s happening with interest rates.

If it seems like interest rates have been going up almost every day, then you are correct. There has been this risk off trade that has pushed stock and bond prices down. Investors are taking profits as there seems to be more and more concerns over valuations and the trade war with China.

For most of 2018 interest rates have remained relatively constant but (graph 1) starting on August 24until today, 10yr Treasury rates have gone up 40bps to right around 3.18%. In fact, just this Wednesday the 10yr hit 3.25% midday.

The last time we’ve seen a 10yr at this level was all the way back in May of 2011 (graph 2). In 2011 the 10yr started the year at 3.35% and close the year at 1.95%. In 2018, the 10yr started at 2.45% but where will it finish the year? Don’t be surprised if the 10yr closes above 3% but below 3.5%. Even though the trend has been for higher rates, inflation is still very low and higher rates and the trade war will impact the economy. Not to mention that globally U.S. Treasury rates are a bargain compared to other countries.

For example, the US 10yr is at 3.18% but in the UK their 10yr is 1.72%, in France 0.90%, in Germany 0.55%, in Japan 0.14% and lastly Australia 2.75%. As far as sovereign debt is concerned, the US 10yr offers very attractive yields with little inflationary risk.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. First and foremost is the Federal Reserve. They raised the benchmark rate two weeks ago 25bps and it’s likely they will raise again at the December meeting. The Fed pushing up the front end of the curve is creating pressure on the long end and with that, mortgage rates.
2. With inflation and job data being along the lines of expectations for so many months, economic data hasn’t driven rates as much as headlines have, whether it be trade war, legislation or even upcoming elections. So be mindful of headline risk which generally causes markets to be more volatile.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Gradual Rise of Interest Rates

Today we are going to talk about what’s happening with interest rates.

For the last couple of weeks, we’ve seen interest rates creep up and up. In fact, the yield on the 10yr Treasury is now over 3%; something that hasn’t happened very often since the financial crisis. The graph on your screen shows the 10yr for the past 8 years. What’s interesting is the fact that the 10yr has not sustained a 3+% yield for 30 straight days since 2011.


Additionally, the high for 2018 is 3.11% and if we break through that level then it’s possible the 10yr could rise all the way to 3.50%. Right now, the 10yr is at 3.06% and we are getting close to that level of resistance, but we aren’t there yet.

There are a lot of disagreements about where rates will head from here. Almost everyone agrees the Fed will raise rates 25 basis points next week. There is some disagreement on whether the Fed raises rates again in December. And the largest disagreement is on what the Fed will do in 2019. The range of predictions is between one interest rate hike to four.

In financial lingo, you have monetary hawks and doves. A hawk is a bird that flies high, so think of hawks as those that want rates higher. A dove is a low-flying bird, so in market terminology they want lower rates.

The hawks believe the economy is strong, inflation is holding steady and the Fed will continue along its path to policy normalization. The hawks don’t believe the Fed needs to concern themselves with an inverted yield curve (that is to say a condition where the yield on the 2yr Treasury is higher than the 10yr Treasury). In their minds, the Fed is going to raise rates four times in 2019.

The doves on the other hand point to low inflation, an escalating trade war, low bond yields around the globe and an inflated stock market. Doves believe an inverted yield curve could absolutely spook the market and it is a very strong recessionary signal. They believe the Fed will raise one to two times in 2019.

Who will be right is hard to predict but I will say that for the past several years the Fed has had to error on the side of caution and they should be more concerned with the trade war, stock prices and an inverted yield curve than they do inflation.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. I’ve said it before and I’ll say it again … keep watching the yield curve. Today the spread is only 25bps and we have the Fed raising rates next week 25bps.
2. As I just mentioned, the Fed meeting next week will be big. Yes, they will raise rates 25bps but what language do they use and what are their predictions on rates for the remainer of 2018 and 2019?
3. Also, next week after the Fed is Core PCE, the Fed’s preferred inflation measurement.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Long Term Treasury Demands

The Treasury Building in Washington D.C. This public building is a National Historic Landmark and the headquarters of the US Department of the Treasury

Today we are going to talk about what’s happening with interest rates.

If you’ve been following the market, you’ve likely noticed that interest rates have come down ever so slightly over the last few weeks. While it may seem like near certainty that the Federal Reserve is going to raise rates two more times this year, there are some dynamics that are keeping long-term rates down.

The spread between the 2yr and 10yr Treasury (SPREAD GRAPH) is continuing to shrink and is hovering right around 23 basis points. That’s the lowest level since the financial crisis. What this spread tells us is two things, number one is there is great demand for long term Treasuries and two, inflation is not a concern.

Remember that investors don’t just care about the level of interest rates but the level of real rates. The easiest way to explain real rates is the following: the current 10yr is trading right around 2.85%. If inflation is running at 2.0% then the investor is only getting a 0.85% return in comparison to inflation, which is quite low.

However, when an investor buys a U.S. Treasury, not only do they get the 0.85% return, but they also get an investment in U.S. dollars. The return they get on dollars is a greater return than the bonds themselves, if the value of the dollar goes up.

In fact, over the past few months, you can see how strong the dollar is in comparison to the price of gold.

The higher the value of a U.S. dollar, the more gold it can buy which means the price of gold goes down in relation to the dollar.

In summary, on the one hand we have strong demand for longterm treasuries, a strong dollar and mild inflation. And on the other hand, we have a strong economy and a Federal Reserve that wants to keep raising rates. As the two of these paths come together, it’s flattening the yield curve and may eventually intersect. The next Fed meeting is not until September 26th so it’s unlikely the yield curve will invert before then.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. The curve, the curve, the curve. Keep watching the spread between the 2yr and 10yr. How close can it get to inverting before the Fed moves or speaks.
2. Also, some important inflation data comes out next week with PCE. If it’s over 2.2% on an annualized basis then we could see rates move up rather abruptly.  Remember, higher inflation means investors need higher interest rates to get a return.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Unemployment And Labor Force

Magnifying glass over a newspaper classified section with Job Market text

Today we are going to talk about what’s happening in the capital markets.

The trend of low rate volatility has continued over the past few weeks with the 10yr hovering right around 2.95%, about the same level it was 60 days ago.

Last week was the monthly jobs report which showed the unemployment rate dropped just below 4.0% to 3.9% in July along with 157k jobs added versus the prior month which was adjusted to 248k new jobs.

The labor force participation rate remains at 62.9%, which is still quite low. The chart on your screen shows the participation rate over the past 20 years and as you can see it’s one of the reasons the low unemployment rate isn’t necessarily the best indicator on the strength of the labor market.  The participation will likely remain low for some time and needs to be addressed.

Moving over to inflation, late last month we saw Core PCE on a year over year basis was down slightly to 1.90%.  Even though it’s running close to the Fed’s target of 2.0%, the fact that it hasn’t crossed over that threshold by now should give the Fed some comfort that they don’t need to raise rates very quickly.

Speaking of the FOMC and raising rates, the FOMC met last week and held rates flat, which was in line with expectations. The market is pricing in near certainty that the Fed raises rates 25bps on September 26th and there is about a 75% chance they raise again in December. I’m still holding out that the Fed should and will only raise in September given the lack of inflationary pressure and the continued uncertainty on the trade war.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. Keep watching the 10yr, it is inching closer to 3% and if there any positive develops on trade, it could cross over.
2. There is some inflation data this week with PPI and CPI but unless there are any surprises, I would expect either to move the rates needle much.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Price of Gold & Long Term Rates

3D illustration of gold ingots over black background with a chart. Financial concept, horizontal image.

Today we are going to talk about what’s happening with interest rates.

You probably noticed that there has been very little interest rate volatility recently.  In fact, the tight range on the 10yr Treasury in June was the smallest it’s been in several years.  July has put some slight upward pressure on rates and the growing consent is that the Fed is going to keep raising rates even though the yield curve might invert.

You might be asking yourself, “why are long term rates staying low even though the Fed keeps raising rates”?  There are several reasons but take a look at the following graphs.


That graph shows the US 10yr over the past year.  Notice the yield has been pretty stable but rising ever so slightly.  Now look at the yield on the Canadian 10yr, the UK 10yr and the Japanese 10yr.  One big reason rates are staying relatively low in the US is that rates around the world in many countries are much lower.

A second factor is that the price of gold has come down materially.   The price of gold is dropping for two reasons.  The first is a stronger economy which raises the value of the dollar.  The second is the lack of inflation or inflationary pressure.  Normally during periods of high inflation, the price of gold and other commodities will rise rapidly.

In summary the gold market tells us that the economy is strong and there is little inflation which is exactly what the interest rate market says.  The economy is strong and the Fed is raising short term rates.  The prospects for inflation are low and that’s keeping longer term rates low.

Will this trend continue, or will eventually the long end of the curve finally rise, sending mortgage rates higher?

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. Watch the 10yr Treasury and whether it can stay below 3%.  If it climbs above 3.10% then it could be part of the push towards higher rates
2. Also, next week’s Fed meeting.  The market doesn’t expect them to raise rates but the language on whether they will raise once more or twice more this year is very important.
3. And last, let’s not forget about inflation data.  Will it give the Fed the excuse it’s looking for to raise rates?

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Ongoing Trade War

Today we are going to talk about what’s happening with interest rates.

Last week was the ever-important payroll report which showed 213k jobs added in June versus the 195k that was expected. A very positive sign but the more interesting piece of data was the unemployment rate which surprisingly went up from 3.8% to 4.0%. This was largely a result of a growing labor force, as the labor force participation rate also went up 0.2%.

The market’s reaction was very muted because the ever-growing threat of a trade war is still dominating the direction of interest rates. The graph on your screen shows that overall the 10yr has had very little movement recently and is hovering right around 2.85%.


The trade war is pushing long-term rates down but the Fed has indicated it plans to continue to raise short term rates so that is making the interest rate markets very uneasy. The spread between the 2yr and 10yr Treasury is down to 27bps. Just to give you some perspective, a year ago that spread was 97bps and 3 years ago it was 177bps.

At this point the ongoing trade and tariff battles will determine the path of interest rates and it appears the back and forth between the U.S. and its trading partners is not slowing down. That could keep interest rates repressed. However, be careful, because any sign of reconciliation or an agreement would push longer term rates much higher. If the yield curve gets any flatter, the news itself could cause somewhat of a panic and recession fears would likely dominate the headlines.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. Most importantly and almost exclusively is the ongoing trade disputes and tariffs. They will wear on the market very heavily for quite a while.
2. And slightly related is the shape of the yield curve, if the spread between the 2yr and 10yr continues to shrink, recessionary fears will start hitting the market.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: Federal Funds Rate Increase

Businessperson's Hand Arranging House Model Over Stacked Coins On Green Grass

Today we are going to talk about what’s happening in the capital markets.

Last week was another FOMC meeting where they raised the Fed Funds rate to the range of 1.75 to 2.0%, in what was a widely anticipated move.  The attention now shifts to the meeting in September with the market pricing in an 81% chance the Fed moves rates for a third time this year.  Also, there is now a 50% chance the Fed raises rates a fourth time in December.

Turning to the Treasury market, the 10yr is holding below 3% and is currently trading at 2.92%.  The constant public sparring over tariffs has the market somewhat concerned about the possibility of a slowdown, which is keeping mortgage rates lower.  One major item to watch closely is the spread between the 2yr and 10yr Treasury, often referred to as the shape of the yield curve.  It’s running dangerously low at 0.35%.  That’s the lowest it’s been since 2007, right when the Fed started their campaign of lowering interest rates to stimulate the economy.

On the inflation front, CPI is running around 2.2% year-over-year and PCE is still below 2.0%, currently at 1.80%.  The graph on your screen shows both of those indices over time and you will notice that PCE is still below 2%.

Speaking of indices, the S&P Case Shiller home price index recently came out and showed that home prices continue to climb.  The graph on your screen shows the trend of home prices over the past 10 years in 20 major metropolitan areas.  Home prices are now up 55% nationally since February of 2012.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. First and foremost is the stock market and the trade disputes.  Will the economy keep roaring ahead and leave the door open for the FOMC to continue to raise rates.
2. Also, the shape of the yield curve; will the 2yr rise above the yield on the 10yr, which has been a great prognosticator of recessions.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: 10 Year Treasury

Hello everyone and welcome back to the Mortgage Rundown. Today we are going to talk about what’s happening in the capital markets. If you’ve been following the market you’ve likely noticed that the 10yr Treasury is back down below 3%. When it seemed like nothing would stop the 10yr from rising to 3¼%, fears in Europe, mainly Italy caused a rush to safety. Right now the 10yr is trading right around 2.95% in a new range between 2.8 and 3.1%.

Last week was the ever important non-farm payroll report which showed 223k jobs added in May and an unemployment rate of 3.8%.  The unfortunate part of the report was that the labor force participation rate came down which likely was the main reason the unemployment rate dropped to its lowest level.

Another somewhat disappointing figure was PCE, the Fed’s preferred inflation measurement.  It is still stubbornly below 2% on an annual basis.  So for all of the talk and all of the speculation that inflation would imminently surpass 2%, the data shows that the economy isn’t there yet.

And there was a wild card thrown at the market with the talk of tariffs and the new fear that a trade war could ensue.  This would hurt GDP and prevent rates from moving any higher.

With next week’s FOMC meeting, you should expect the Fed will raise the benchmark rate 25bps to the target range of 1.75 to 2.0%.  And if you are hoping the 10yr continues to trade below 3%, please be very cautious of the risks.

All indications are that inflation will continue to move higher despite the recent stall.  The impact of tax reform is still working its way through the economy.  And let’s also not forget that the Fed plans to raise rates 2 more times in 2018, with an outside chance of 3 increases.

Read more HERE

In the coming weeks you should keep an eye on the following items:
1. Next week is the FOMC meeting so we should see a 25bps increase to the Fed Funds rate.
2. The threats of tariffs could completely derail the Fed’s plan on interest rates.  Is this all tough talk or will we inch closer to a trade war?

Have a hankering to watch the full lowdown about the rundown? Of course you do!

Mortgage Rundown: 2018 Rate Increase

Caution Sign Sky Background - Mortgage Rate Increases Ahead

Today we are going to talk about what’s happening in the capital markets.

The FOMC meeting came and went last week with little change in the Fed’s stance of 3-4 interest rate increases for 2018. If anything the Fed was slightly more dovish in their tone when they stated it’s possible they could slightly overshoot their inflation target of 2%. The translation of that means that perhaps there will only be three interest rate increases this year.

Thanks to those comments by the Fed, the 10yr has held under 3.03% and currently sits at 2.99%.

Speaking of inflation, all indications suggest inflation is starting to rise rapidly and the chart on your screen shows the Fed’s preferred inflation measurement PCE. You will notice that it’s quickly rising towards 2%, which is what has caused rates to continue to rise over the past several months.

With inflation rising this rapidly the market was assuming the Fed would have to raise rates four times this year to slow it down. As I mentioned earlier with the Fed’s comments about slightly overshooting 2%, I wouldn’t expect the Fed to raise rates four times this year unless inflation rose closer to 2.5%.

The general consensus is that the Fed will raise rates in June and September with no increase in the 4th quarter.

On the economic data front, the payroll report came out last week with the Unemployment rate at 3.9%, well below the Fed’s target. The graph on your screen shows the UE rate over the past 20 years and as you can see it’s near the low of 3.8% reached back in 2000.

With rising inflation and a low unemployment rate, how long can the 10yr remain below 3.03%.

Read more HERE


In the coming weeks you should keep an eye on the following items:
1. Inflation data will continue to take the spotlight, will it continue to rise at this fast pace?
2. Most economic news won’t be available for a few more weeks so continue to watch stock prices.  If they continue to rise it will put pressure on the 10yr in breaking above 3%.

Have a hankering to watch the full lowdown about the rundown? Of course you do!

A Beautiful Woman Opens a Few Windows

Meet Susan.

Susan isn’t your typical chick—she’s a lot of rock and a little roll. One that I am grateful to have interviewed and one who turned me into a huge fan in an instant. This incredible woman opened a few windows into her life’s journey. Some I can share and others I cannot. But our chat was a reminder that the view is always just a little different from another’s window.

Window One

After a torrential storm of a marriage she successfully clawed her way out of it. The story is juicy, but I told you there were some things I couldn’t share.

Window Two

Susan doesn’t necessarily have a cush, six-figure income. Nor do a lot of single women in Orange County. You can picture it; the sound of the mundane and empty chatter throughout the sea of cubicles, the constant typing on a keyboard for a pay check, the empty water cooler chatter, and the clock-in/clock-out life.

So, she sat. In a hum-drum job dreaming of what could be, but simply was not. For a good number of us, it’s a struggle to make ends meet when you live in the OC. We all know that the struggle is truly real, cliché or not. Susan was simply faced with a meager salary, working as a clerk for a contractor in the government sector, and wasn’t working an ounce less than a six-figure person. But damnit she wanted to buy a home. No matter what it took.

Window Three

Year after year, she had been in long-term leases and owning a home was a distant dream. However, her father passed away leaving her a good chunk of change that she ‘thought’ she could use for a down payment for a home of her own. She tried and failed because of see Window Number Two above—she simply didn’t qualify in her income bracket.

As we all know, living in the OC isn’t necessarily what Hollywood would care to present—it’s a challenging place to live when you are on a dime.

As time ticked by, Susan questioned whether she would be a forever “renter” or if she would ever have HER own place. Not her parent’s place, not her husband’s place, not some landlord’s place—but HER place—HER HOME.

Window Four

And now we are talking! We get to open the promotion window. Susan continued to persevere in her workplace and was promoted to a much higher paying position and left on that sunny, promotion day with her head held high, hopes in check and a fire in her belly. It was time. Time to get the right people on her side and part of her dream.

Timing was epic. Her lease was coming to an end soon, so she reached out to one of the clerks at her work who had recently obtained her real estate license, Monique Bates. Instead of having her look for a lease, she decided to have her look for a home.

Window Five

When she first started house hunting in the areas she was interested in you can say she was a bit deflated with what her budget allowed.  Place after place, her budget was bringing her to pockets of ghettos she didn’t even know existed in Orange County. Run-down mobile parks were not what she had in mind nor a home stinking of litter boxes and air freshener or a community where the balconies were covered in junk. You know the type of communities I am referencing. That was not her vision in the least. The fire in her belly started to dim.

So now what?

Window Six

Enter Beny. Susan’s real estate friend introduced her to Beny and they were off to the races. That fire started to flame once again. After being introduced to Beny her spirits were high! Everything went swiftly from there. She found a beautiful home in Laguna Niguel, which is where she was originally leasing. She didn’t have to alter her community involvement, change her grocery stores, or commute for that matter.

The moment she walked into the beautifully upgraded condo, she knew it was HER home as she fell instantly in love. Bonus…the previous owners had invested over $85k in upgrades so it was not only home, it was turnkey.

Beny held her hand through the whole process. She felt comfortable calling him on the weekends, at night and if he was on vacation she was always taken care of!

“It was a wonderful experience and a joy to work with him,” she said. “He helped me reach my dream and I am forever grateful for our relationship. I will refer him forever.”

Her new home has beautiful plantation shutters on the windows. Each morning she opens them, takes a deep breath and looks out from her home with an overwhelming feeling to pinch herself.

I won’t pinch you Susan, but I will thank you for opening your windows to me. It was a pleasure to meet you and to now call you friend.


Written by Lyndsay Johnson
Bound-by Marketing