North - South Korea Conflict = Lower Rates

Heightened International Tension Strengthens Dollar

The conflict between North and South Korea is having a predictable effect on credit markets this morning.

Specifically, whenever international tensions kick up, there is a flight to safety, which -- at least until now -- translates into demand for U.S. dollars and U.S. debt.

That strengthens the dollar, and (also) drives interest rates lower, however temporarily.

Getting the Jump on the (Wall Street) Journal

"Told 'Ya So" Department

You read it here first -- by four days, to be exact:

No, it's not good when already volatile markets lurch downward like they've done the last couple days. However, astute financial observers know that such turbulence is also accompanied by a "flight to safety" -- in this case, U.S. debt. The silver lining is that anyone who's on the cusp of refinancing can do so at rates that are temporarily "on sale."

--"Flight to Safety = Rate Drop: Market Melt-Down Creates Refinancing Opportunity"; City Lakes Real Estate blog (5/20/10)

Now compare that with what's in Monday's Wall Street Journal:

The financial turmoil in Europe is providing an unexpected windfall for American home buyers, as international money seeking a safe haven is flowing into the U.S., pushing domestic mortgage rates to the lowest levels of the year and back near 50-year lows.

--"Mortgage Rates Decline"; The Wall Street Journal (6/24/10)

Nice scoop, if I say so myself!

P.S.: No, I'm not clairvoyant -- it's typical for print articles to post online the night before publication.

Flight to Safety = Rate Drop

Market Melt-Down Creates Refinancing Opportunity

No, it's not good when already volatile markets lurch downward like they've done the last couple days.

However, astute financial observers know that such turbulence is also accompanied by a "flight to safety" -- in this case, U.S. debt.

Doesn't the U.S. have a $13 trillion (and counting) deficit, and many more trillions in unfunded obligations?

Doesn't really matter, at least for the moment; in the land of the financial blind -- that would be the Eurozone at the moment -- the one-eyed man is King.

What does that mean for the the housing market?

A weaker economy -- if that's indeed what's ahead -- isn't great news.

However, the silver lining is that anyone who's on the cusp of refinancing can do so at rates that are temporarily "on sale."