Daily Rate Summary
Tuesday, September 12th, 2017

Mortgage Rates and Treasury Yields Rise.
On Monday, Treasury bond yields and Mortgage interest rates rose as “all-clear” signal for macro event-risk sends investors out of safety of bonds and into equities.  With the Debt-Ceiling extension agreement as cover until December, it’s risk-on for speculators and investors again in the markets as Hurricane Irma fears subside.  The December 10 Yr. U.S. Treasury Note stood at a yield of 2.1306% and the 30 Yr. U.S. Treasury Bond is yielding 2.7430%.  30 Year Mortgages according to Freddie Mac were around 3.78% for conforming and 3.58% for Jumbo products.

The Bureau of Labor Statistics (BLS) reported U.S. Job Openings in July have soared to a new all- time high of 6.170 million (see chart below) an increase of 54k on the month and well above the 6.0 million consensus forecast.  In its so-called JOLTS report for July the BLS said that the recent surge in job openings which was observed first last month, when job openings smashed expectations above 6 million for the first time ever, after nearly two years of being rangebound between 5.5 and 6 million.

BLS JOLTS Report: July Job Openings Rose to a record 6.170 million Total Nonfarm
(Chart courtesy of Bureau of Labor Statistics & Zerohedge.com).

The number of job openings was little changed for total private and decreased for government (-58,000). Job openings increased in a number of industries with the largest increases occurring in other services (+111,000), transportation, warehousing, and utilities (+70,000), and educational services (+26,000). Job openings decreased in health care and social assistance (-72,000), state and local government, excluding education (-46,000), and federal government (-21,000). Aside from the unexpected surge in job openings, the rest of the report was more subdued, with the pace of hiring reversing last month's decline, and rising by 69,000 to 5.501 million, according to Zerohedge.

30 Year U.S. Treasury Bond Yield Falls Below 2.6572% then ramps higher at 2.7430%.
(Chart courtesy of Zerohedge.com).

The 30 Year U.S. Treasury Bond has now extended its trading range to below 2.70% and may be presaging lower yields and a new lower trading range.

30 Year U.S. Treasury Bond Yield Testing range between 2.70% and 2.75%.
(Chart courtesy of Zerohedge.com).

We are now testing the lower ranges of long bond yields in the 30 Year U.S. Treasury Bond since the market moving comments from ECB President, Mario Draghi regarding the tapering of bond purchases in late-June.

10 Year U.S. Treasury Note Yield Falls to 2.0187% then Rises to 2.1323%
(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 above 2.1306%.
(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 Increase to 35.1%
(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 3.78% with the rate falling 0.04% basis points from the previous week.

Treasury Prices Fall and Yields Rise 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 127’00 / 32nds; the 10 Year Note was down 16 basis points (bps) on the day, yielding 2.1306%.  The US 30 Year Treasury Bond futures Contract for December settlement closed at a price of 156’00 / 32nds; the 30 Year Bond was down 41 basis points (bps) on the day, yielding 2.7430%.  Mortgage Rates are again hitting their 2017 lows and are down another 0.04% bps from the previous Freddie Mac Survey last week.

Thanks to ZeroHedge.com, Bureau of Labor Statistics, Bloomberg.com, 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.