GLOBAL INSTABILITY & INTEREST RATES

When there is political instability in the world (especially in the oil- rich Middle East), Investors around the world retreat from risky stocks in order to seek safe haven in US dollar-backed investments. It’s US Treasury Bills, and other Government  guaranteed investments like Fannie Mae, Freddie Mac and Ginnie Mae mortgages, that attract the most  attention. This is due to the relative safety of these bonds. In turn, like with most supply and demand, the high demand drives the interest rates that investors receive down. The short term effect has been lower mortgage rates here in the US. But, as global circumstances change, so can interest rates.

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