10-Year Treasury Yields Hit 13-Month High

Yesterday, the stock market snapped its five-day winning streak. The market is down again today, but not by much.

The investing world is waiting on the results of the Federal Reserve meeting. The policy statement will come out at 2 pm ET. No change on interest rates or bond buying is expected. However, folks expect the Fed to revise its forecast for economic growth higher. Private forecasters have very optimistic outlooks for this year. Of course, that’s really recovering a lot of lost ground.

This morning’s housing report was a bit of a dud, but some of that was probably due to the lousy weather we had last month. For February, housing starts fell to an annual rate of 1.421 million. This was below expectations. Additionally, December and January were revised lower.

Applications to refinance a home are down 39% from one year ago. As interest rates on long bonds creep higher, so do mortgage rates. That’s starting to have an impact on the refi market. The 10-year Treasury just hit a 13-month high of 1.676%.

I used to talk a lot about the spread between the 2- and 10-year Treasury. This was especially true in August 2019 when the spread went negative. That’s often been a precursor of a recession. It was right again, but for very different reasons. In any event, the spread has dramatically widened in recent months, which should be good news for the economy.

Posted by on March 17th, 2021 at 10:48 am


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