Yield on 10 Year Treasury Bonds Hit 3%
Last week while everyone’s attention was focused on Santa Clause it may actually be the Grinch we should have been paying attention to. As of this morning the average overnight rate of a 30 year fixed conforming mortgage sits at 4.56% up 4 basis points from where we stood a week ago. While not a huge jump it was enough to push this number higher than we have seen since june 10th of 2011.
Next week the Fed starts their announced pullback on purchases or our debt from 85 billion per month to 75 billion and it has yet to be determined what future effect this will have on rates. What is clear is the Fed, who has amassed over 3 trillion dollars of our debt through the various quantitative easing programs in place over the 5 years, has left a gap that another investor will now have fill and presumably will want a higher return.
I still do not see how they can let rates move much higher as the interest on our national debt at some point becomes “unpayable”. What we do know is the yield on the 10 year treasury to which interest rates are closely tied hit 3% for the first time in over two years but did pull back on a disappointing jobs report.
Rates are still vary favorable, but how long they will stay there, that is the question.