Treasury Yields/Mortgage Update: 30-year Fixed Mortgage Up Fractionally

by: Doug Short

What's New: I've updated the charts through today's close. The S&P 500 is 2.25% off its interim high set on September 14, the day after QE3 was announced. The latest Freddie Mac update, released today, shows the 30-year fixed has risen three basis points to 3.39%, now fractionally above its historic low set last week. The general pattern in Treasury yields has been somewhat volatile since several of them hit historic closing lows in late July. The 10-year yield, now at 1.70 is somewhere in the upper middle of its 1.43 - 1.88 range since the July historic low.

Here is a snapshot of selected yields and the 30-year fixed mortgage one week after the Fed announced its latest round of Quantitative Easing.

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The 30-year fixed mortgage at the current level no doubt suits the Fed just fine, and the low yields have certainly reduced the pain of Uncle Sam's interest payments on Treasuries (although the yields are up from their recent historic lows). But, as for loans to small businesses, the Fed strategy continues to be a solution to a non-problem. Here's a snippet from the latest NFIB Small Business Economic Trends report:

Thirty-one (31) percent of all owners reported borrowing on a regular basis, up 1 point from August. Eight percent of owners reported that all their credit needs were not met, also up 1 point. Thirty-two (32) percent reported all credit needs met, and 50% explicitly said they did not want a loan. Only 2% reported that financing was their top business problem....
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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.

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Now let's see the 10-year against the S&P 500 with some notes on Fed intervention.

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For a long-term view of weekly Treasury yields, also focusing on the 10-year, see my Treasury Yields in Perspective.