Will stocks continue to hit record highs? Can the U.S. 10-year yield push even lower from current levels? How high can gold prices go? Home borrowing costs have declined...is the market going to see a further drop?

The closely watched S&P 500 Stock Index rose nearly 25% in 2023 nearing its record high close hit back on January 4, 2022. Stocks rose this year as inflation declined while the economy fared well and on the strength of tech sector shares. Looking ahead to 2024, Goldman Sachs has revised their 2024 S&P 500 price target up to 5,100 from 4,700.

After a big increase in 2023, home borrowing costs began to fall in early November from near 8% to 6.67% for the 30-year fixed in the latest survey as potential buyers breathed a sigh of relief. Most forecasts are looking at the mid-6% range to a bit lower in 2024.

The most closely watched security in the world is the U.S. 10-year note yield. It hit a high of 5.02% at the end of October and has recently plunged to 3.90%. A rising yield indicates falling demand for Treasury securities, which means investors prefer higher-risk, higher-reward investments, while a falling yield suggests the opposite. One forecast sees the yield falling to 3% by the end of 2024.

Gold prices have recently hit an all-time high of $2,135 per ounce. And you may ask what gold prices have to do in an article about rates and yields. When gold prices rise, it means that investors become unsure about the health of the economy and take their money out of stocks and move it into gold or Treasury securities. When Treasury prices rise, Mortgage-Backed Securities tend to follow the same path which in turn lowers interest rates and borrowing costs.

But stocks are currently near all-time highs as well as gold prices. We will see how this plays out in 2024.

Bottom line: Putting aside the above numbers and forecasts, the need for housing remains constant no matter what type of environment the economy or housing is in.

Source: Mortgage Market Guide