Daily Rate Summary
Thursday, February 8th, 2018

Mortgage Rates Rise and Treasury Prices Fall.
On Wednesday, Treasury bond yields and Mortgage interest rates rose as Bond investors turned negative on fixed-income and gov’t bonds.  Bonds lose value as interest rates rise.  Though Stocks have fallen some, prices are still lofty!  The runs to all-time highs on the averages are over for now.  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 2.8359% and the 30 Yr. U.S. Treasury Bond yielding 3.1139%.  30 Year Mortgages according to Freddie Mac were around 4.32% for conforming and 4.63% for Jumbo products.

According to the Federal Reserve Board, "Credit Card, Student and Auto Debt All Hit Record Highs in December and while December total consumer credit increased by less than the expected $20BN, it was still an impressive $18.45BN, of which $5.1billion was credit card debt and $13.3 billion non-revolving - or student and auto - loans."  

U.S. Total Consumer Credit Hits Historic Record High in December Source: Federal Reserve.
(Chart courtesy of Zerohedge.com).




Commenting on the Credit data, Zerohedge.com said, “More importantly, with the latest $5.1 billion increase in revolving, or credit card, debt the total is now $1,027.9 billion, the highest number on record.  Meanwhile, non-revolving credit which with the exception of one definition change month, has never gone down, also hit a new all-time high of $2.813 trillion, a monthly increase of $13.34 billion.”

30 Yr. U.S. Treasury Bond back above 3.10% again.
(Chart courtesy of Zerohedge.com).








U. S. 10 Year Note Yield above 2.8500%.
(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 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.

Market-Implied # of Rate-Hikes In 2018 above 2.5 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 4.32% higher by 10 basis points (bps) 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 March settlement closed at a price of 121’00 / 32nds; the 10 Year Note was down 15.5 basis points (bps) on the day, yielding 2.8359%.  The US 30 Year Treasury Bond futures Contract for March settlement closed at a price of 144’20 / 32nds; the 30 Year Bond was down 45 basis points (bps) on the day, yielding 3.1139%.  Mortgage Rates are near their 2018 highs and are higher by 10 basis points (bps) from the previous Freddie Mac Survey last week.

Thanks to ZeroHedge.com, Federal Reserve Board, 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.