Daily Rate Summary
Thursday, August 9th 2018

Mortgage Rates and Treasury Yields Fall Slightly.
On Wednesday, Treasury bond yields and Mortgage interest rates fell slightly as the Fed has decided to keep the Federal Funds rate unchanged.  The U.S. 10-Year Note is oscillating between 2.75% and the psychologically important 3.00% yield level.  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 2.962% and the 30-Yr. U.S. Treasury Bond yielded 3.112%.  The 30-Year Mortgages according to Freddie Mac were around 4.59% for conforming and 4.68% for Jumbo products.


According to Zerohedge.com, “After a "stormy" week of non-stop economic news, political drama and corporate earnings, the calendar takes a break this week with a lull in market sensitive data and events. The US CPI report is the highlight while Q2 GDP reports in Japan and the UK are also worth a mention. Inflation data will also be out in China while earnings season will start to wind down across the US and Europe. As always, markets will be closely watching the rhetoric out of the US and China as the war of words on trade rumbles on."

Key Economic Releases for the Week of Aug 6th – Aug 10th.
Source: BEA, BLS, Census Bureau, Federal Reserve, ISM, U of M, IHS Markit, Bloomberg and Barclays Research.
(Chart courtesy of Zerohedge.com).

Finally, focusing just on the US, Goldman writes that the key economic release this week is the CPI on Friday. There is one scheduled speaking engagement by a Fed official this week, by Richmond Fed President Thomas Barkin on Wednesday,” said Zerohedge.com.

U.S. 30 Year Note Yield is back below 3.08% again.
(Chart courtesy of Zerohedge.com).

U.S. 10 Year Note Yield back at about 2.95% again.
(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 Probability of a 2 Additional Rate Hikes rises to 35.0%.
(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 4.59% having decreased by 1 basis point (bps) from the previous week and are still near the highs for 2018.

 

Treasury Prices Rise and Yields Fall 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 September settlement closed at a price of 119’16 / 32nds; the 10 Year Note was up 1 tick on the day, yielding 2.962%.  The US 30 Year Treasury Bond futures Contract for September settlement closed at a price of 142’20 / 32nds; the 30 Year Bond was up 1 tick on the day, yielding 3.112%.  Mortgage Rates are near their 2018 highs and decreased by 1 basis point (bps) from the previous Freddie Mac Survey last week.

Thanks to ZeroHedge.com, RedFin, National Association of Realtors (NAR), Bureau of Labor Statistics (BLS), Macro-Tourist Kevin Muir, Google.com, FRED, Citi Research, Bureau of Labor Statistics (BLS), Aspen Graphics / Bloomberg, BEA, BLS, U.S. Census Bureau, Federal Reserve, ISM, U of Michigan, IHS Markit, Bloomberg and Barclays Research, B of A Merrill Lynch Global Research, Goldman Sachs, Deutsche Bank (DB), 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.