Constant Maturity Treasury Indexes: An Economic Indicator?

 |  Includes: IEF, SPY, TLH
by: Ron Haruni

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Three Month Maturity

Constant maturity Treasury indexes are used on regular basis by lenders to set the interest rates on adjustable rate mortgages.

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One Year Treasury

The Fed’s latest target interest rate cut (range of zero to 0.25%), lowered the rate on which the majority of adjustable-rate mortgages are based. The 1 Yr T. CMT index is used to set the cost of variable-rate loans, particularly ARMs. The index, known for its volatility, responds quickly to changes in economic conditions.

Disclosure: None