I've updated the charts below through Wednesday's close. The S&P 500 is now 5.10% off its interim high set on September 14th, the day after QE3 was announced. The interim low since then was -7.66% last Thursday. The 10-year note closed Wednesday at 1.69, which is 19 basis points off its interim high of 1.88, also set the day after QE3 was announced. The historic closing low was 1.43 on July 25th. The big news is Freddie Mac's Weekly Primary Mortgage Market Survey. The 30-year fixed has set another all-time low, now at 3.31 percent. Here is a snapshot of selected yields and the 30-year fixed mortgage starting one week after the Fed announced its the previous round of Quantitative Easing (QE2). Click to enlarge
For a eye-opening context on the 30-year fixed, here is the complete Freddie Mac survey data from the Fed's repository. Many first-wave boomers (my household included) were buying homes in the early 1980s. At its peak in October 1981, the 30-year fixed was at 18.63 percent. Click to enlarge
The 30-year fixed mortgage at the current level is a confirmation of a key aspect of the Fed's QE success, and the low yields have certainly reduced the pain of Uncle Sam's interest payments on Treasuries (although the yields are up from recent historic lows of this summer). But, as for loans to small businesses, the Fed strategy is a solution to a non-problem. Here's a snippet from the latest NFIB Small Business Economic Trends report:
Access to credit continues to be low of the list of small-business owner concerns. Twenty-eight (28) percent reported all credit needs met, and 52 percent explicitly said they did not want a loan (64 percent including those who did not answer the question, presumably uninterested in borrowing as well).
A Perspective on Yields Since 2007
The first chart shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since 2007. The source for the yields is the Daily Treasury Yield Curve Rates from the U.S. Department of the Treasury and the New York Fed's website for the FFR.
Now let's see the 10-year against the S&P 500 with some notes on Fed intervention.
For a long-term view of weekly Treasury yields, also focusing on the 10-year, see my Treasury Yields in Perspective.