Daily Rate Summary

Mortgage Rates and Treasury Yields Fall.
On Thursday, Treasury bond yields and Mortgage interest rates fell as Credit Market participants bet on volatility and interest rate moderation in ‘quiet’ period in August.  The September 10 Yr. U.S. Treasury Note stood at a yield of 2.1975% and the 30 Yr. U.S. Treasury Bond is yielding 2.7729%.  30 Year Mortgages according to Freddie Mac were around 3.90% for conforming and 4.10% for Jumbo products.

The Commerce Department released Core Consumer Price Index and the reading came in at 1.7% below the hoped for 2.00% inflation target the Fed was expecting.  On the heels of 'disappointing' (to some) producer price data, consumer prices missed expectations for the 5th month in a row with a mere 0.1% rise MoM (0.2% exp). Year-over-year growth in core consumer prices also slowed for the 7th straight month dropping to just 1.7% - the slowest since Jan 2015. Amid this dismal report, there is a silver lining for Americans, the cost of shelter rose just 0.1% - the smallest rise since March.

Core Consumer Price Index Falls to 1.70% (YoY)
(Chart courtesy of Zerohedge.com).

This is an unwelcome signpost for Central Planners trying desperately to conjure some inflationary ‘animal spirits’ to assist them in their interest rate raising & balance sheet normalization policy trip.

30 Year U.S. Treasury Bond Yield fall to 2.7972% then steadies at 2.7729%
(Chart courtesy of Zerohedge.com).

The 30 Year U.S. Treasury Bond is now expanded its trading range between 2.80% and 2.94%; as market participants try to guess whether we get a manufacturing recovery this summer or we dip back into recession in the real-goods producing sector of the economy.

30 Year U.S. Treasury Bond Yield Rangebound between 2.80% and 2.94%.
(Chart courtesy of Zerohedge.com).

At the extremes of this range buyers of long bonds can be counted on to appears in force when the 30 Year U.S. Treasury Yield moves to the top of this range around 2.94%; conversely, sellers come out when the yield falls to 2.80%.

10 Year U.S. Treasury Note Yield Falls to 2.2212% then steadies at 2.1975%
(Chart courtesy of Zerohedge.com).

This gyration in bond yields looks like it wants to resolve itself by moving much lower into the gap that was formed post-election last November.  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.

10 Year U.S. Treasury Note Yield Longer-term View back below 50-Day MA at 2.26%
(Chart courtesy of Zerohedge.com).

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 month.  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.

 

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 3.90% with the rate falling 0.03% basis points from the previous week.

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 126’18 / 32nds; the 10 Year Note was up 7 basis points (bps) on the day, yielding 2.1975%.  The US 30 Year Treasury Bond futures Contract for Sept. settlement closed at a price of 155’11 / 32nds; the 30 Year Bond was up 20 basis points (bps) on the day, yielding 2.7729%.  Mortgage Rates have come off their 2017 lows and are down 0.03% bps from the previous Freddie Mac Survey last week.

Thanks to ZeroHedge.com, Commerce Department, Bloomberg.com, and FreddieMac.com for Charts and Graphics.

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