To the average consumer, a rally in government bonds, which sends yields down, is not exactly earth-shattering news.
But it’s something to be grateful for if you’re shopping for a mortgage or other consumer loan.
Bonds are rallying because they hold safe-haven status. And world turmoil across the globe, in Ukraine, Iraq and Gaza, has been the focus of global markets this week, adding to concerns about the slow pace of growth in the global economy. And distracting from what is mostly a steady economic recovery in the U.S.
The rally in Treasury securities has surprised analysts. Most Wall Street strategists and economists projected rates would be up this year, especially as the Federal Reserve slowly pulls back and prepares to tighten monetary policy.
The Central Bank is seen as starting to raise short-term interest rates next year.
Lower bond yields so far have baffled bond investors and analysts who believed that the yield should have continued to climb past 3 percent at the start of the year.
Instead, yields have slumped, helping keep rates on mortgages at or near their lows for the year. The 30-year fixed rate is at 4.14 percent this week, according to Freddie Mac, and that’s still in historically low territory.