Quadruple Witching

Quadruple Witching

Early morning on CNBC, they are singing “Ding dong, the witch is dead,” and “That ole black magic” as the stock market continues to rally (and has just opened UP 50 points), in spite of this being a quadruple witching day. While the stock market has been rallying for the last 2 weeks, there is always concern about volatility on triple or quadruple witching days, as all the options expire simultaneously and must be closed out or left to expire. Historically we have seen bond yields drop as investors move into the security of bonds during volatile markets. But this morning, the yield on the 10 year bond is up slightly from the close yesterday.

Should you be concerned about mortgage rates if the yield on the 10 year bond is rising? With the Feds “subsidizing” mortgage rates by purchasing mortgage backed securities, mortgage rates have been holding steady at and around 5% for the 30 year fixed rate mortgage, and this is likely to continue for now. Yes, mortgage rates move slightly as the yield on the 10 year bond fluctuates, but the movements have been small recently. The yield on the 10 year bond is currently at 3.45%, after having dropped below 3.4% yesterday.

Investors are still moving into the markets trying to catch this moving train. If you had been invested in the market since the "bottom" in March, your investments would be worth 20% more. It's Friday. Who knows what news will break over the weekend or Monday morning?