After many quarters of robust growth, the stock market has been plunging on fears of the spreading Coronavirus — a pandemic that’s already claimed multiple lives in the United States. Investors are weary and the numbers on Wall Street show it. So what does the Federal Reserve do? They initiate an emergency rate cut of 50 basis points, bringing the 10-year Treasury yield down below 1% for the first time, to 0.927% on Tuesday. Meanwhile the 30-year Treasury bond yield is also at an all-time low of 1.601%.
The cost of borrowing money is cheap, and that’s what the Fed wants right now — to counteract the negative effect of the Coronavirus, which is poised to further harm the United States economy in the coming weeks. What do low rates mean? Those who can qualify are mulling over thoughts of buying a home or refinancing one they already have. And gold investors? They’re in a buying spree, too. Gold surged on the news of the Fed rate drop, reaching beyond $1,640 after dropping below $1,590 last Friday.
What’s next? It’s anybody’s guess. And while rates are likely to stay low for months ahead, gold prices are far more ephemeral. No doubt, gold coin dealers — and perhaps mortgage brokers — are very busy these days and are sure to be for some time to come.