Armageddon? Maybe not

After a 7 day span which saw the stock market shed nearly 2,000 points, many clients have asked me if all of this is a sign of things to come for the bond markets. After S&P incredulously dropped our credit rating to AA+ (that's still about as good of a grade you can get in college, I think) stock markets once again dropped several hundred points today. Yet the most shocking thing was that people bought up treasuries in droves. After hearing the news of our country's increased risk of defaulting on our debt, I would have at least thought that investors would be cautious with treasuries and bonds. However, it seems that we are definitely the best of all evils and that there really isn't anywhere else that investors are comfortable to park their money

While the run up higher in mortgage bonds recently is nice, I feel that we are ripe for a reversal shortly similar to the one we saw Friday in which MBS shed a full 100 BPS. I think it is safe to say that rates will still be low in the short term but I fear that investors will soon start to have that sinking feeling creep in when they start to realize that the United States is not the infallible safe haven we used to be

The next 7 to 10 days of economic reports will also determine how far the government will need to go to prop us up again. I wouldn't be surprised at all to hear serious consideration (possibly even implementation?) of QE3 at the fed meeting tomorrow

We are in some volatile and scary times right now. But I still believe that real estate is a sound investment in the long run and that now is the time to take advantage of these ridiculously low rates.

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About Tamir Lahav

Tamir Lahav joined Peak Finance Company in May of 2006. Lahav brings to the table a strong understanding of how all aspects of the mortgage business impact consumers and their ability to obtain affordable mortgages under any economic climate. His advanced product knowledge, combined with an exceptional customer service ethic and insight into market conditions, have made him a valuable asset to the Peak Finance Company team. Lahav successfully merges his expertise of exceeding customer expectations with knowledge of changing market conditions to successfully help all of his clients find the perfect solution for their needs.

Tamir can be reached at tamir@peakfinanceco.com.