It seems mortgage rates can’t catch a break lately.
So maybe we need a Plan B. Or rather, a Plan C!
Have you ever heard of Inverse Cramer?
Whenever Jim Cramer says something, the opposite tends to happen. It’s a powerful market signal.
And he just said bonds keep dropping relentlessly, meaning their yields or interest rates keep rising. That could be good news for mortgage rates!
Cramer Says Bond Market Selloff Is Relentless
In case you’re unaware, bond yields correlate well with 30-year fixed mortgage rates, specifically the 10-year bond yield.
Bonds have both a price and a corresponding yield.
When the price of a bond drops, its yield (or interest rate) goes up.
Conversely, when bond prices are rising, their yields fall.
In his X post, Cramer said bonds are getting absolutely destroyed right now, which is pushing their corresponding yields higher.
He seems to see no end in sight for the “sell-off” that he refers to as “unnerving,” which oddly could be bullish for interest rates.
Bullish because most people think Cramer is always wrong, meaning the bond selloff might soon be over.
If in fact bonds do all of a sudden rally, their yields (interest rates) would fall.
That would spell relief for mortgage rate rates as well since the two are highly correlated.
So, in this instance, like in most other instances, we are rooting for an Inverse Cramer.
We are rooting for bonds to become attractive again, which will lead to lower yields. And by extension, lower mortgage rates as well.
That would be good for the housing market, which is struggling with rates near 7% again, and rates above their year-ago levels.
Inverse Cramer Tends to Outperform Other Investments
While it’s kind of a silly thing, Inverse Cramer seems to be one of the top performing investments out there.
There’s even a tracker called Inverse Cramer that does the opposite of whatever he says.
And it always seems to outperform the market and all other metrics.
In fact, it even beat the S&P and Nancy Pelosi’s famed stock portfolio.
So perhaps this is what mortgage rates need to finally reverse the upward trend we’ve seen for months.
And it’s not just a silly meme. You can make the argument logically because bond yields are near their highest level in years.
At a certain point, they become attractive to investors and their yields come down as their price rises.
That’s not to say they can’t go higher, but they could be at the top of their range and due for a reversal.
Which is kind of the whole point with Jim. By the time he, or any other TV personality declares something, it’s usually old news.
So when he’s crying that bond prices keep dropping, and there’s no end in sight, the end actually is in sight. Go figure, right.
Mortgage Rates Won’t Change Because Cramer Said So
Of course, it’s going to take more than Jim Cramer talking about it.
We’re going to need to see actual economic data or news that supports a move into bonds, which will lower their yields.
Most importantly, something positive on the Iran conflict and the Strait of Hormuz.
That’s behind much of the rise in bond yields and mortgage rates this year.
If we don’t get that, it’s probably all just wishful thinking.
Nevertheless, it’s always a good chuckle whenever Cramer chimes in about something at this point.
And I’m sure a lot of prospective home buyers, loan officers, mortgage brokers, and real estate agents will be happy to see that he thinks bonds are cooked!
(photo: Owen Byrne)
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