Updated on September 21, 2020 10:09:19 AM EDT
We are seeing a typical correlation between stocks and bonds this morning. Generally speaking, what is bad news for stocks is usually considered good news for bonds. As stocks go into selling mode, funds are often shifted into bonds that are considered safer. This is known as a Flight to Safety. The good news is that this should cause mortgage rates to move lower if the stock selling continues this week. On the other hand, the risk is that once stock traders get over whatever it is they are reacting to, stocks may rebound and draw funds away from bonds. That scenario would likely erase the rate improvements we saw as stocks were dropping. The key is whether or not this is a one-day sell-off in stocks or the beginning of a larger downward move.