Bonds had their best stretch in a while last week, as worries about the tech sector sent investors looking for safety. This week opens with very little economic data, so the bond market will take its cues from stocks and corporate earnings.
What happened
The rally started midweek when shares of a high-profile AI infrastructure company dropped hard and the cost of its corporate debt jumped. Traders feared the trouble could spread across the tech sector. Treasuries gained from the move to safety, and the slowdown in tech spending also eased worries about heavy corporate borrowing, which had been pushing yields up. The 10-year yield fell by a wide margin over a couple of days and ended the week well below its recent highs.
The rally came despite a batch of inflation and retail data that ran hotter than forecast. That tells you how much the tech story dominated. By Friday, bonds gave back a small slice of the gain as oil prices rose, but most of the improvement held. This morning stocks have bounced off Friday's lows, and yields have edged up a bit as a result.
What to watch this week
The only notable report today is a builder sentiment survey, and the rest of the week is light on high-impact data. That leaves earnings from large tech names and any fresh signs of stress in credit markets as the main drivers. If the tech jitters return, bonds could rally again. If the selloff in tech fades, the safety trade could unwind and yields could drift back up. Oil prices and geopolitical news remain in the background.
What it means for you
If you are floating a rate, be careful. Last week's improvement came from a fear trade, and those moves can reverse quickly when the fear passes. The hotter inflation numbers did not go away, they were simply outweighed. Buyers with a contract and a closing within the next few weeks should talk with their loan officer about locking sooner rather than later.
If you are still shopping, a better week in the bond market is welcome, but it should not rush your decision. Focus on a price and payment that fit your budget, and we can run a few scenarios so you know where you stand. Homeowners thinking about a refinance should pick a target and let us watch the market for you. A clear plan usually beats trying to guess the bottom.
The bottom line
The market is calmer and a bit friendlier than it was two weeks ago, but the reason behind it is shaky. Expect choppy trading, keep your lock decision tied to your own closing date, and call us any time you want to talk through options.