Constant Maturity Treasury Indexes: An Economic Indicator?

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

click to enlarge

Three Month Maturity

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

click to enlarge

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