Daily Rate Summary
Tuesday, April 25th, 2017

Rally Continues in Treasury Yields & Mortgage Rates.
On Monday, Treasury yields and Mortgage Rates were consolidating gains after the six weeks of lower yields to usher in the spring home-buying season. This is now six weeks in a row of lower interest rates, engineered by a Fed that had no less than 5 Fed governors go out on the speaking trail and say; "no…we are really serious about raising interest rates and normalizing our balance sheet, we're not kidding". Instead, from mid-March thru April the 10 Year Note yield has instead fallen over 50 bps in that time. On Monday, the 10 Yr. U.S. Treasury Note stood at a yield of 2.2730% and the 30 Yr. U.S. Treasury Bond yielded 2.9288%. Previous week, 30 Year Mortgages according to Freddie Mac were around 3.97% for conforming and 4.39% for Jumbo products.

Post Fed the whole U.S. Treasury yield curve is still flattening in response to last month's anticipated Federal Reserve rate move. Long dated Treasuries are being strongly bid up as investors seek a bargain in the higher yields that occurred in the run-up to the Fed meeting. The U.S. Bond market is serenely calm as to the future Debt Ceiling negotiations, Interest Rate increases, and signs that Inflation is heating up.

30 Year Treasury Yields Have Fallen Below 3.00% (Courtesy of Zerohedge.com)

30 Year Treasury Bond yields have been falling consistently since the March 15^th meeting by the Federal Reserve and its decision to hike the Federal Funds Rate by 0.25%. The benchmark yield now stands below 3.000%.

June Rate Hike Odds Rise to 68% (Chart courtesy of Zerohedge.com).

As displayed in the Chart, the odds of a June rate hike by the Federal Reserve have been volatile during the past few weeks oscillating between 68% and 37%. The market is discounting the Fed's commitment to its espoused path of tightening in the Federal Funds rate, even though its own updated Implied Fed Funds Target Rate (Dot Plot) still shows two or three increase in 2017.

Implied Fed Funds Target Rate (Dot Plot)
(Chart courtesy of Zerohedge.com).

The so-called Dot Plot suggests that the Fed Funds Rate will be 1.75% by the end of 2017 which indicated two additional rate hikes this year.

U.S. 10 Year Treasury Note Yields are Falling
(Chart courtesy of Zerohedge.com).

The 10 Year Treasury Note is now over 36 bps lower than at the time just before the Fed's last meeting in March, this would seem to be counter-intuitive to the proposed path of interest rates, but suggests a correction was in order due to everyone believing rates were only going to rise.

Weekly Mortgage Rates Analysis

As can be seen from Freddie Mac's Mortgage Market Survey, last week, 30 Yr. Fixed Mortgage rates for conforming loans hit 3.97% just in time for the Spring home-buying season.

Treasury Prices Rise and Yields Fall for U.S. 10 Yr. and 30 Yr. Treasuries.
On the Chicago Board of Trade (CBOT): the US 10 Year Treasury Note futures Contract for June settlement closed at a price of 125'25.5 / 32nds; the 10 Year Note was down 8.5 basis points (bps) on the day, yielding 2.2730%. The US 30 Year Treasury Bond futures Contract for June settlement closed at a price of 153'14 / 32nds; the 30 Year Bond was down 23 basis points (bps) on the day, yielding 2.9288%. Mortgage Rates were unchanged on the day from the previous trading session.

Thanks to ZeroHedge.com 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.