Daily Rate Summary

Mortgage Rates and Treasury Yields Fall Slightly.
On Monday, Treasury bond yields and Mortgage interest rates fell slightly as investors await March data on wage increases as a gauge to underlying direction of inflation in the economy and its impact on 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 economic growth potential. The 10 Yr. Treasury Note stood at a yield of 2.8681% and the 30 Yr. U.S. Treasury Bond yielding 3.1292%.  30 Year Mortgages according to Freddie Mac were around 4.46% for conforming and 5.02% for Jumbo products.


According to Bloomberg Markets report, “The data indicate inflation is gradually picking up without any big acceleration. That’s in line with policy makers’ outlook for price gains steadily approaching their goal and officials’ projection for three quarter-point interest-rate hikes this year, including one anticipated at the Fed’s meeting next week.”

February Consumer Price Index Rises 2.2% as Expected Core CPI Slows to 1.8% (YoY)
Source: Labor Department
(Chart courtesy of Zerohedge.com).

As Chief Economist from Raymond James Financial explains, “The report suggests it’s more of the same: a gradual pace of rate increases, and again there’s nothing here that suggests the Federal Reserve needs to slam on the brakes” with a more aggressive rate-hike strategy, said Scott Brown, chief economist at Raymond James Financial in St. Petersburg, Florida. “Just tapping on the brakes every quarter seems like a likely scenario.  With this report, it’s clear the Fed is “almost certainly raising rates this month but certainly there’s no reason to do more, like 50 points,” Brown said."

30 Yr. Mortgage Rates (Inv) vs. Pending Home Sales Index.
(Chart courtesy of Zerohedge.com).

U.S. 30 Year Note Yield below 3.10% briefly then back above 3.16%.
(Chart courtesy of Zerohedge.com).

U. S. 10 Year Note Yield above 2.8500% briefly.
(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 2.94 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 4.46% higher again by 3 basis points (bps) 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 June settlement closed at a price of 120’06.5 / 32nds; the 10 Year Note was up 5.5 basis points (bps) on the day, yielding 2.8681%.  The US 30 Year Treasury Bond futures Contract for June settlement closed at a price of 143’23 / 32nds; the 30 Year Bond was up 19 basis points (bps) on the day, yielding 3.1292%.  Mortgage Rates are near their 2018 highs and are higher again by 3 basis points (bps) from the previous Freddie Mac Survey last week.


Thanks to ZeroHedge.com, Labor Department, Raymond James Financial, National Association of Realtors (NAR), Mortgage Bankers Association, B of A Merrill Lynch Global Research, Goldman Sachs, Bloomberg, and FreddieMac.com for Charts and Graphics.

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.

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