It sure feels like a goldilocks scenario with the market being stoked by low-to-negative interest rates, slow growth, and low inflation. That said, new highs were hit this week for the troika of the stock indexes. The U.S. 10-year Treasury closed at a touch under 1.500%.
The ongoing benefits of massive global central bank stimulus include low debt in all sectors, including mortgages. As low as interest rates are in the United States, we may see interest rates go lower especially when considering 10-year Italian Treasury bonds are trading for .500%, a full percentage point lower than U.S. government debt. Go figure.
The downside to low rates is bank margin compression. That is one reason why we continue to remain biased toward locking in interest rates at these levels.