Bonds across the board and across the globe are taking a hit over the past 24 hours with some analysts claiming the 10-year Treasury could top 2.00%. This is coming on the heels of some positive Foreign Investorseconomic data first coming out of Britain where it is being reported the GDP of the United Kingdom rose by an unexpected 0.5%, in spite of the post-Brexit fears that the UK ultimately pulling out of the European Union would hamper economies in Eastern Europe along with the UK. These positive GDP numbers push back on that notion and investors are selling bonds, including mortgage bonds here in the states with the benchmark FNMA30-yr 3.0 dropping as much as 12/32 as of mid-morning. So what are we to make of this selloff? Probably not very much, if you listen to some analysts.

 

Instead, it’s more than likely a shift in positions in advance of the elections. The prevailing thought is that Central Banks are finished trying to pump money into the economy by forcing rates lower. Here at home, Durable Goods Orders fell by 1.2% in August after excluding non-defense capital goods orders, this according to the Commerce Department today. This breaks a three-month string of solid gains.

We’re closing into the midway point of the final quarter of the calendar year and once the election is over, more attention will be paid back to the Fed and less so to economic reports. If markets react in a similar fashion as they have over the past year, if the Fed does indeed raise rates at their final round of meetings for the year in December we could anticipate a sell-off in stocks along with higher bond yields.