Market Commentary – 1/22/16

The global equity market began cutting some losses on Thursday and into Friday morning after another very volatile week for stocks. The positive late week turn-around in equities may be attributed to both Japanese and European central bank policy statements of more economic stimulus in the near term.

Oil remains front page news with prices dropping again earlier in the week before recovering. Oil is trading above $31 per barrel. One would think that low oil prices would be a boom for businesses and for the consumer. However, the pundits have indicated the drop in oil and other commodities as cause for concern from both a deflationary and economic standpoint. The markets want inflation as it is a positive economic indicator of future growth, and oil is the indicator everyone is looking at.

The 10-year U.S. Treasury yields dropped to around 1.94% mid-week in response to the chaotic markets. This will spur more refinancing activity in the short term.

There was some very positive news on the housing front. December existing home sales surged nearly 15% from November to an annual rate of $5.46 million.

Given the move lower in yields, we are biased toward advising clients to lock in interest rates at the current levels. Should volatility subside, interest rates may suffer an increase in yields.