After weeks, and months, of analyzing the possibility of Russia invading Ukraine, Russia eliminated any doubt last week by attacking. Markets don’t like uncertainty, and the assault removed that. Orion is concerned with the aggression and loss of life, of course, but we are also carefully monitoring the impact of foreign news on your clients’ mortgage rates while traders monitored the latest happenings in Ukraine, where Russia used air, land and naval forces for an invasion that shocked the world.

There maybe some information to be gleaned from the stock market. Stocks scored anamazing comeback last week, initially selling off on the deteriorating Russia-Ukraine situation, then rallying on optimism that the conflict could have only a minimal impact on the U.S. economy. The turnaround came after President Biden issued targeted sanctions Thursday afternoon that did not affect Russia's oil and gas exports or block Russia's access to the SWIFT financial system, sparking the rebound that continued into Friday.

But Orion and our brokers watch the bond market. The shock and uncertainty of a war in Europe could discourage the Federal Reserve from being aggressive about hiking interest rates, which had been weighing on stocks before Russia's invasion. Sure enough, when bond prices rallied and yields sank, analysts were talking about “buying the dip:” when a steep selloff is followed by an unprecedented amount of buying that sends indices to continuous record highs. But most agree that there is still "too much uncertainty" out there.

Shifting gears slightly to a look at what is directly influencing the U.S. economy and therefore mortgage rates, households are flush with cash, and they are willing to use it. Consumers are demonstrating strong propensity to dip into their savings in order to sustain higher spending. Last week we learned that thesaving rate declined from 8.2% to 6.4% in January, the lowest since 2013. But just because the saving rate is low does not mean that the consumer is tapped out. The saving rate represents the share of monthly income that is not spent. Jefferies reports that 80 percent of the U.S. population sitting on the largest cash piles in more than 20 years. Yes, if spending continues to be strong, rates will tend to continue their upward path.

The severege opolitical tensions of the Russian attack on Ukraine, and uncertainty about how aggressive the Fed might be in hiking rates based on recent Fed rhetoric, will move our interest rates. But our brokers know that many questions remain. Economic sanctions, while making headlines, in the past have had debatable impact. Will these be any different? What are the odds of a meeting between Russia and Ukraine? Will the situation in Ukraine influence the world economy enough to change our Federal Reserve’s path of rate increases?

All ofthis, however, has little direct impact your potential clients: renters who can save money every month by taking advantage of the still low rates and buying a home. Or when our brokers can help people save money by refinancing and paying off other debt. They’re out there!

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