Daily Rate Summary
Friday, August 17th 2018

Mortgage Rates and Treasury Yields Rise Slightly.
On Thursday, Treasury bond yields and Mortgage interest rates rose 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 2.865% and the 30-Yr. U.S. Treasury Bond yielded 3.028%.  The 30-Year Mortgages according to Freddie Mac were around 4.53% for conforming and 4.67% for Jumbo products.


According to Zerohedge.com, “While the past week was somewhat quiet data wise, news flow should step up next week with key releases of note in the US being the July retail sales report and industrial production among others. With regards to the economic data that’s due out next week, in the US we’ll get a few important releases which should help to further shape Q3 GDP expectations. The highlights come on Wednesday when we get the July retail sales report (consensus is for a +0.1% mom headline reading and +0.5% mom control group reading.)"

Key Economic Releases for the Week of Aug 13th – Aug 17th.
Source: BEA, BLS, Census Bureau, Federal Reserve, ISM, U of M, IHS Markit, Bloomberg and Barclays Research.
(Chart courtesy of 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 2.86% 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 4.53% having decreased by 6 basis point (bps) from the previous week and are still near the highs for 2018.

 

Treasury Prices Fall and Yields Rise 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 September settlement closed at a price of 120’08.5/ 32nds; the 10 Year Note was down 5.5 ticks on the day, yielding 2.865%.  The US 30 Year Treasury Bond futures Contract for September settlement closed at a price of 144’17 / 32nds; the 30 Year Bond was down 7 ticks on the day, yielding 3.028%.  Mortgage Rates are near their 2018 highs and decreased by 6 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.