Daily Rate Summary
Friday, September 22nd, 2017

Mortgage Rates and Treasury Yields Mixed.
On Thursday, Treasury bond yields and Mortgage interest rates were unchanged.  After eight days in a row interest rates & bond yields stopped worsening.  The Fed statement contained no fireworks and the credit markets began to rally after the statement was released.  With the Debt-Ceiling extension agreement as cover until December, it’s “risk-on” for speculators and investors again in the equity markets as inflation fears once again hurt bonds.  The December 10 Yr. U.S. Treasury Note stood at a yield of 2.2765% and the 30 Yr. U.S. Treasury Bond is yielding 2.8050%.  30 Year Mortgages according to Freddie Mac were around 3.83% for conforming and 3.60% for Jumbo products.

 

Markit reports a mixed bag for preliminary September measures of Services PMI fell 4.9 pts to a reading of 55.1 from 56.0, while Manufacturing PMI rose 0.2 pts to a reading of 53.0 from 52.8 in August.  Meanwhile, the economy continues to weaken according to the ‘Hard’ Data outlook.

Institute for Supply Management (ISM) Services & Manufacturing PMI for September.
(Chart courtesy of Zerohedge.com).

 

As Markit notes, with Manufacturing limping higher but Services missing expectations and slipping notably.  After 5 straight months of gains, the US Composite PMI dropped back below pre-election levels.  There were signs of underlying fragility in September, with new orders expanding at one of the slowest rates seen over the past year.  Latest data also indicated that new export sales remain close to stagnation.  Despite the ongoing collapse of 'hard' economic data, 'soft' surveys continue to remain hopeful...

30 Year U.S. Treasury Bond Yield Rises above 2.8065% then Settles lower at 2.8050%.
(Chart courtesy of Zerohedge.com).
 

 

The 30 Year U.S. Treasury Bond Yield has now expanded its trading range from 2.65% downside to 2.80% on the upside, the yield jumping in just four trading sessions back to the top-end of the new extended trading range.

 

30 Year U.S. Treasury Bond Yield Testing lower range back above 2.75%.
(Chart courtesy of Zerohedge.com).

 

The 30 Year U.S. Treasury Bond has now tested the lows and returned to 2.80% the starting point 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 2.2765%.
(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 above 2.25%.
(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 67.2%.
(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 3.83% up 0.05% bps from the previous week.

 

Treasury Prices Steady and Yields Flat 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 125’20 / 32nds; the 10 Year Note was unchanged on the day, yielding 2.2765%.  The US 30 Year Treasury Bond futures Contract for December settlement closed at a price of 153’28 / 32nds; the 30 Year Bond was up 4 basis points (bps) on the day, yielding 2.8050%.  Mortgage Rates are just off their 2017 lows and are up 0.05% bps from the previous Freddie Mac Survey last week.

 

Thanks to ZeroHedge.com, ISM, Bloomberg.com, Markit, 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.