Interest rates and Bond market Volatility

Have you seen interest rates lately?  In the last few days mortgage interest rates and bond yields have continued their move higher. For some lenders rates are at the highs of 2015.  Bond yields are making daily swings up and down with pressure to the upside as bond investors wait for the Fed meeting next week.  So the question is why; why are interest rates higher along with bond yields? It seems that the European bond market has taken over the direction of US bonds and investors are a bit nervous over next week’s Fed meeting.

European bonds have had a significant sell off the last few weeks and in a sympathetic move the US bond market has sold off as well.  Economic reports all year have been week however a few reports last week were a bit strong than expected.  The jobs report didn’t help the bond market as that report was much stronger than expected. Generally speaking it seems bond investors would like to see many months of data when it comes to driving bond yields lower however they don’t require the same time frame to drive rates and yields higher.  One or two weeks of slightly better than expected economic data and bond investors drive yields higher.  Bond investors are very skittish right now.

So what’s needed to drive interest rates and bond yields lower?  The Fed along with a less volatile European bond market.  As usual all roads lead to the Fed as investors need the Fed’s direction before buying bonds again.  So it appears bond investors are going to wait until next week before they make any attempts to buy bonds and drive down interest rates.