Posted on 06/06/2013 5:44:48 PM PDT by whitedog57
Today, ECB President Mario Draghi said that the European Central Bank (ECB) will keep its main interest rate on hold at a record low 0.5 percent on Thursday, saying that improved economic data in May confirmed its forecast of a gradual recovery from prolonged recession later this year.
Draghi sees GDP growth at -0.6%. Oh that tepid news, European sovereign yields rose, some by over 20 basis points.
Draghi-fly effect?
While US Treasury markets remain relatively quiet today, mortgage rates continue to rise, puttingoa chink in the housing recovery armor. Here is a chart of Freddie Mac’ loan commitment rate (white) and the Bankrate 30 year fixed rate national average.
Likewise, the Fannie Mae and Freddie Mac primary-secondary spreads continue to rise since Fannie and Freddie were put into government conservatorship in 2008.
So, Draghi hinting at improvement in Europe resulted in rising sovereign yields in Europe. And mortgage rates rise in the US.
Much like Ian Malcolm said in “Jurassic Park”: “The shorthand is the ‘butterfly effect.’ A butterfly flaps its wings in Peking, and weather in New York is different.”
Or its called “markets find a way.”
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