Treasuries rallied for the second day in a row leaving most of the curve unchanged for the week. The two-year finished up 5/64, and the ten-year was higher by 1 7/32. The benchmark curve flattened by 11 basis points, to end the week at +253.5 bps, flatter than we began the week believe it or not. A basis point represents .01%.Mortgage rates as measured by the Fannie Mae 60-day Commitment Rate spiked 48 basis points yesterday to 5.21%. I normally quote the Mortgage Bankers Association Survey, which is only updated weekly. The Fannie Mae Commitment Rate is a rate commonly used in the mortgage origination industry, and is updated daily. Although it is not reflected in the graph the rate pulled back to 5.11% today.
It was certainly a wild week in rates but we really didn’t get anywhere. Mortgage rates are likely to stay above 5% after this week’s volatility, while the market waits to see if the Fed makes a move. The graph below shows the ten-year Treasury yield starting the week at 3.45%, and ending at 3.456%. If you took the week off you didn’t miss anything.
Next week is without an auction or a Fed purchase in the Treasury market, leaving traders with a few less worries.
Have a great evening.
Cliff J. Reynolds Jr., Junior Analyst
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