The US Federal Reserve Chairman Ben Bernanke did not want to withdraw stimulus from the market. There were recent speculations that feds may start to tighten the market soon – but that is not happening now – not till end of this year.
According the US Federal Reserve – the recent rate increase showed that the market is still vulnerable to such moves. Financial market took the announcement as good news and gained some upward speed. Despite of many speculations about the time period of monetary withdrawal– the fed has clearly said that – no fixed schedule.
The worst enemies of such hawkish moves are employment and business growth. In both front economies around the world are not posting encouraging numbers. Therefore to keep things moving – the US central bank would not take any drastic actions.
The tapering of taper talks caused bonds to fly high. Even Canadian bond yields fell in last two days. (When bonds prices go up their yields fall). As of today Canadian five bond yields are still hovering above 2% mark. Continuation of US bond buying program will eventually push the yields off the peak.
If the yields go below 2% then there should be some more discounts in mortgage rates.
It appears that 2014 will be an interesting year to watch financially.