Daily Rate Summary
Monday, September 24th 2018

Mortgage Rates and Treasury Yields Rise.
On Friday, Treasury bond yields and Mortgage interest rates rose as the Fed meets again this week to decide 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 3.065% and the 30-Yr. U.S. Treasury Bond yielded 3.201%.  The 30-Year Mortgages according to Freddie Mac were around 4.65% for conforming and 4.875% for Jumbo products.



According to Zerohedge.com, “Here is Goldman's preview of just US events, where the key economic data releases this week are the durable goods report on Thursday and core PCE on Friday. In addition, the September FOMC statement will be released on Wednesday at 2:00 PM EDT, followed by Chairman Powell’s press conference at 2:30 PM.”

Key Economic Releases for the Week of Sept 24th – Sept 28th.
Source: ING, 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 at 3.23% again.
(Chart courtesy of Zerohedge.com).

U.S. 10 Year Note Yield back at 3.08% 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 4.65% having increased by 5 basis point (bps) from the previous week and are still near the highs for 2018.

 

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 118’21.5 / 32nds; the 10 Year Note was up 2.5 ticks on the day, yielding 3.065%.  The US 30 Year Treasury Bond futures Contract for December settlement closed at a price of 140’11 / 32nds; the 30 Year Bond was up 3 ticks on the day, yielding 3.201%.  Mortgage Rates are near their 2018 highs and increased by 5 basis point (bps) from the previous Freddie Mac Survey last week.

Thanks to ZeroHedge.com, ING, 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.