Bonds are sensitive to global events, and a major one occurred today. The People’s Republic of China announced several stimulus measures to boost their economy.

Key actions include cutting the average interest rate on existing mortgages by 0.5%, lowering minimum down payment requirements, and other steps to release a significant amount of funds.

While this may seem positive on the surface, it raises global inflation concerns and China’s stability. More global funds drives demand, limits supply and increases prices.

When I’m asked how far and when I expect rates to drop, the answer is more complex than it initially appears. The Bond Market around the world moved lower in price. Translation slight rate improvement.

Case Shiller Home Price Index rose 0.2% in July with Home prices up 5% year over year.