Interest rates surged to 2-year highs last week, apparently in response to news that OPEC countries struck a deal to limit oil production. True, if OPEC is willing to do what it takes to push fuel prices higher, it only adds to the inflationary fears already pushing rates higher. But even as OPEC dominated this week's headlines, there are more important things keeping housing and mortgage markets up at night.
Financial markets are understandably very interested in the stuff that fuels the movement of goods around the world. The massive drop in oil prices at the end of 2014 saw the healthy interest grow into an obsession, with far too many market movements being forced to fit the oil price narrative. It's a seductive thesis, especially for interest rates, given oil's inflation implications.
Oil prices do indeed have strong correlations with interest rate movements. Last week was a good example of that, as we'll see in the following chart.
But the chart also shows that this week's correlation is a small drop in a much bigger bucket.
At the end of the day we can still get rates in the low 4’s and even in the 3’s on the 15-year, but as gas prices rise so will rates. Call me for custom options at 801.599.5363 today or get a Quick Quote today!