Daily Rate Summary
Monday, April 16th, 2018

Mortgage Rates and Treasury Yields Fall Slightly.
On Friday, Treasury bond yields and Mortgage interest rates fell slightly as bond sector investors see value and rotate into bonds.  Though Stocks have fallen some, prices are still lofty just a couple of percent off all-time-highs in indexes.  Nervous investors mull economic signals and the impact of the Tax cut on future growth potential & the aging economic recovery. The 10 Yr. Treasury Note stood at a yield of 2.8267% and the 30 Yr. U.S. Treasury Bond yielding 3.0270%.  30 Year Mortgages according to Freddie Mac were around 4.42% for conforming and 4.48% for Jumbo products.

Source: freddiemac.com 

“In the US this week there's not a lot of market sensitive data due out. The big release will be this morning at 8:30am when we get the March retail sales report. The market consensus is for a +0.4% mom headline reading, +0.4% mom ex auto and gas reading and +0.3% mom control group reading. As a reminder the latter is what goes into the national accounts. Other data due next week includes the March housing starts (+2.7% mom expected), building permits (+0.7% mom expected) and industrial production (+0.1% mom expected) data on Tuesday, and initial jobless claims and the March leading index on Thursday,” Zerohedge.com reported.

Key Economic Releases for the Week of April 16th – April 20th.
Source: BEA, BLS, Census Bureau, Federal Reserve, ISM, U of Michigan, IHS Markit, Bloomberg and Barclays Research.
(Chart courtesy of Zerohedge.com).

Finally, As Zerohedge.com reports, "After three straight months of declines, March retail sales surprised to the upside bouncing 0.6% MoM (+0.4% exp), but ex-autos/gas was a disappointment (rising 0.3% vs 0.4% expectations).  The 0.6% MoM spike was higher than the highest (of 71) economists' estimate."

U.S. 30 Year Note Yield above 3.08% then back below 3.04%.
(Chart courtesy of Zerohedge.com).








U. S. 10 Year Note Yield back below 2.80% and Holding.
(Chart courtesy of Zerohedge.com).

The 10 Year U.S. Treasury Note has tested the lows and is moving back to the upper trading range in bond yields.  We await whether that gap at 2.05% will get filled in coming months.  If so, we will get another run at historically low rates before the final blow-off in Credit Markets sends Mortgage Interest rates up for good.

The above Chart does suggest that a constructive set-up is forming in the 10 Year Treasury Note with the potential to push the yield to around 2.00% over the next year.  It is crucial that Mortgage Rates stay at or below 4.00% or demand for mortgage loans will dry up.  The window of opportunity for borrowers seeking mortgage refinancing & home purchases is still open for now.

Market-Implied # of Rate-Hikes In 2018 above 3.10 rate moves.
(Chart courtesy of Zerohedge.com).

As can be seen from Freddie Mac’s Mortgage Market Survey, last week, 30 Yr. Fixed Mortgage rates for conforming loans hit 4.42% higher by 2 basis points (bps) from the previous week.

 

Treasury Prices Rise and Yields Fall Slightly for U.S. 10 Yr. and 30 Yr. Treasuries.
At the Chicago Board of Trade (CBOT): the US 10 Year Treasury Note futures Contract for June settlement closed at a price of 120’15 / 32nds; the 10 Year Note was up 0.5 basis points (bps) on the day, yielding 2.8267%.  The US 30 Year Treasury Bond futures Contract for June settlement closed at a price of 145’13 / 32nds; the 30 Year Bond was up 1 basis points (bps) on the day, yielding 3.0270%.  Mortgage Rates are near their 2018 highs and are higher by 2 basis points (bps) from the previous Freddie Mac Survey last week.

 

Thanks to ZeroHedge.com, BEA, BLS, Census Bureau, Federal Reserve, ISM, U of Michigan, IHS Markit, Bloomberg and Barclays Research, B of A Merrill Lynch Global Research, Goldman Sachs, Bloomberg, and FreddieMac.com for Charts and Graphics.

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Disclaimer: The Information & content in this message is solely the opinion of the author and believed to be from reliable sources. Charts and tables contained herein were taken from other sources and a best effort was attempted by the author to give attribution where possible. None of this material should be construed as fact, and is not intended for use by reader as investment advice or relied upon for making financial decisions.