Daily Rate Summary
Wednesday, November 22nd, 2017

Mortgage Rates and Treasury Yields Fall.
On Tuesday, Treasury bond yields and Mortgage interest rates fell as bond investors once again punt on bonds in favor of pushing Stocks to all-time highs on the averages.  The allure of fast gains on a frothy stock market outshines boring bonds.  Nervous investors mull economic signals and the impact of the Tax cut on economic growth potential.  Bond investors are looking at the possibility of lower-for-longer policy as an incentive to buy bonds.  Treasury Note stood at a yield of 2.3559% and the 30 Yr. U.S. Treasury Bond is yielding 2.7577%.  30 Year Mortgages according to Freddie Mac were around 3.92% for conforming and 3.72% for Jumbo products.

 

The National Association of Realtors (NAR) reported that Existing Home Sales in the US, rose 2.0% to 5.48 Million units following September's positive housing data rebound.  October data is starting well with existing home sales surging 2.0% MoM (better than expected 0.2%) to 5.48mm SAAR, as US existing home sales inventory tumbled 10.4% YoY, to 1.8 months, the lowest since 1999.

Sales of previously owned U.S. homes rose to a four-month high, indicating demand was firming at the start of the quarter as the impact from hurricanes faded, according to a National Association of Realtors report released on Tuesday.

Existing Home Sales Rise +2.0% (MoM) to 5.48M in October beating Expectations of 5.40M.
(Chart courtesy of Zerohedge.com).



According to NAR, via Zerohedge.com, ““The momentum appears to be good,” Lawrence Yun, NAR’s chief economist, said at a press briefing accompanying the report. The hurricane impact was “more modest” than anticipated in October and activity is “quickly bouncing back.”

The tax plan could be a “major wild-card disrupter to the housing recovery,” he added. Even so, he sees another “respectable year in 2018,” provided any tax changes don’t set back demand.”

30 Year U.S. Treasury Bond Yield Testing range back below 2.80%.
(Chart courtesy of Zerohedge.com).

The 30 Year U.S. Treasury Bond has now tested the lows and returned to 2.80% and back again to the starting point since the market moving comments from ECB President, Mario Draghi regarding the tapering of bond purchases in late-2018.

10 Year U.S. Treasury Note Yield falls back to 2.3559%.
(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 weeks.  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 2.40% again.
(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.

December Fed Funds Futures Rate Hike Odds Rise above 97%.
(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 3.92% lower 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 December settlement closed at a price of 124’22 / 32nds; the 10 Year Note was up 0 basis points (bps) on the day, yielding 2.3559%.  The US 30 Year Treasury Bond futures Contract for December settlement closed at a price of 154’03 / 32nds; the 30 Year Bond was up 14 basis points (bps) on the day, yielding 2.7577%.  Mortgage Rates are just off their 2017 lows and are lower by 3 basis points (bps) from the previous Freddie Mac Survey last week.

 

Thanks to ZeroHedge.com, National Association of Realtors (NAR), BofA 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.