North Korea agreed to shutter its main source of plutonium today in exchange for energy and food considerations after months of negotiations with the United States and other countries. The agreement did not specifically address the disarmament of existing nuclear weapons.
News like this is a mixed bag for mortgage rate shoppers based on how markets interpret the story; North Korea’s nuclear program has a history reaching back to 1993.
If markets view this concession by North Korea as the first step towards complete disarmament, market geopolitical risk is reduced. Bonds lose their luster as a "Safe Haven" security and mortgage rates rise in response.
On the other hand, if markets believe that North Korea merely stalling for time as they continue their nuclear weapon testing, then mortgage rates will decrease as Terror Risk re-enters bond pricing and drives yields down.
