Summary: Treasuries are DOWN 20bp in two weeks. On 12.13.23 the Fed kept rates unchanged however they clearly indicated that up to 3 rate cuts were a distinct possibility in 2024. After that announcement, two senior Fed members indicated that rate reductions could be made later in the year pending economic data.
Looking down the road:
1.5.24 New jobs data for December to be released
1.11.24 CPI data for December to be released
For the past 2 weeks, 10-year Treasury rates were down 20bp. Past week down 2bp.
The red line is the most current rates while the green line is from one week ago. Longer term rates decreased relatively less than shorter-term rates, as such the inverted yield curve is less steep.
For terms 5+ years, the Yield Curve is positive. One month rates were up 3bp.
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 12.13.23 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.