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Treasury Rates Update: December 14th, 2023

DOWN 45bp in two weeks.  NOT A TYPO.  On 12.13.23 the Fed kept rates unchanged however they indicated that up to 3 rate cuts were a distinct possibility in 2024. This is a MAJOR event.


Key dates and results:

1.5.24 New jobs data for December to be released

1.11.24 CPI data for December to be released

1.31.24 Fed Meeting

 

For the past 2 weeks, 10-year Treasury rates were down 45bp. Past week down 22bp.

 

The red line is the most current rate while the green line is from one week ago.

Longer-term rates decreased relative to shorter-term rates, as such the inverted yield curve is more steep. For terms 5+ years, the Yield Curve is positive. One month rates were up 1bp.

 

The spread of the 30 mortgage rate to the 10-year US Treasury rate remains near an all time high. Mortgage rates rocket up and feather down. To reduce the spread either Treasury rates will increase or Mortgage Rates will decrease. Given the Fed’s 1213.23 it looks like Treasury rates will decline in the future and Mortgage rates will follow. What remains to be seen is the impact of the Fed’s reduction in its Treasury and MBS holdings.


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