The ten year Treasury bond has dipped below 2.50%, approaching 2.47% at 12:30 CT, on breaking news that a Malaysian jet has been shot down over Eastern Ukraine.  Geopolitical uncertainty is almost always sure to drive investors out of riskier assets and into the safety and security of liquid, fixed income assets.  Treasury bills and bonds are one of the biggest resources for safe and secure investment funds around the world.  The inflow of funds bids up prices, pushing them higher and the interest rates paid on the bonds lower.  As Treasury bill and bond rates fall, comparable interest rate sensitive or based products react with lower interest rates as well.  The next largest and liquid market after the Treasury market that is frequently impacted is the mortgage bond market.  As Treasury bonds move up in price and yield lower interest rates, so do mortgage bonds.  The correlation between Treasury bonds and mortgage bonds is not 100 percent but they are highly correlated. 

Events such as this can often be short lived and the market may swing back in the other direction within a matter of hours or days.  If the geopolitical uncertainty resulting from the crashed airliner persists, interest rates will hold at lower levels and are sure to drop through a wide gamut of savings rates and lending rates including money market rates, CD rates, and personal loan rates.

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