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Data from US Treasury, Chart by MishYields through December 12 are end-of-day from the US Treasury. December 13 is a current real-time quote.Today, the yield on the 10-year note is up 8 basis points (0.08 percentage points). The yield on the 30-year long bond is up 7 basis points, and the yield on the 3-month note is flat.Change Since September 17, 2024
30-Year Fixed Mortgage Rates(Click on image to enlarge)
Mortgage rates are roughly following 10-year treasury yields.Those expecting mortgage yields to decline with Fed rate cuts were mistaken. I called this behavior in advance, as did some others who understand the implications.Understanding SpreadsSpreads (differences between long- and short-dated Treasuries) increase in rate cutting cycles. This is a normal steepening impact.Steepening can occur with yields on the long end either rising or falling. With rate cuts, yields on the short end always decline.A bullish steepening means rates are the long end and short end of the curve both decline, but yields on the short end drop more.In this case, we are seeing a bearish steepening. That means yields on the long end rise with yields on the short end falling.Widening SpreadEveryone expected the spreads to widen. A minority of us expected the long end to get hammered (yields to rise) this early in the game.The lead chart shows instantaneously.What Does It Mean?
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The Fed is out of its league here.Importantly, the more Trump does what he says on Tariffs and mass deportations, and especially all of his tax cut proposals with no offsetting revenue, the worse inflation will get.The bond market does not believe Republicans will cut the deficit or the Fed will handle things properly, and neither do I.You are free to believe whatever you want.More By This Author:Producer Price Index PPI Much Hotter Than Expected, Led By A Surge In Food Continued Unemployment Claims Plus Those With Expired Benefits Tops 3.5 Million Understanding The Anger Over Healthcare In One Picture
