Treasuries Fall to 9-month Low
Treasury yields fell to a nine-month low on Tuesday as a renewed selloff in oil and stocks sent investors into assets perceived as safe, such as government bonds. The yield on the 10-year note TMUBMUSD10Y, -5.06% —the market benchmark—fell 10 basis points to 1.864% from 1.966% on Monday, its biggest one-day drop since July 6, 2015. Bond yields and prices move in opposite directions. After a brief divergence between risky asset prices and bond yields, Treasury markets continue to trade in close correlation with oil. “Oil continues to dictate market direction. We also had some disappointing earnings from big energy producers, which was not surprising but nevertheless is weighing on stocks,” said Ian Lyngen, senior government bond strategist at CRT Capital. Lyngen noted that 10-year yields correspond with macro outlook, however. (Source: MarketWatch)
Mortgage Rates Down To New 8-Month Low
Mortgage rates only paused for a brief moment of reflection yesterday before continuing with 2016’s trend of improvement. Today’s gains bring them easily back tonew 8-month lows. Last Friday, that’s a designation they shared with a few days in October. Today’s rates don’t need need to talk about sharing the trophy until we get all the way back to April 2015. The average lender is now easily down to conventional 30yr fixed rates of 3.75%. The stronger lenders have gradually been moving down to 3.625%. (Source: Mortgage News Daily)
How does the market for Treasury Bonds affect the Mortgage Market?
The correlation between mortgage rates and Treasury bond rates is ultimately determined by where investors want to invest their money. The structure of the mortgage system in the United States puts mortgage rates in competition with the rates paid on U.S. Treasury bonds. The interest rate trends on Treasury bonds can be used to roughly predict the rate trends for fixed-rate mortgages. (Source: SFChronicle Home Guides)