The 10YR Treasury Just Hit a 19-Year High!
The impact is already being felt across the economy.
By Eli Breece ·
As of the morning of September 23rd, The 10-year Treasury yield has reached 5.063%-
Up from 4.70% a month ago and 4.12% a year ago.
That puts it at its highest level since July 2007, more than 19 years ago.
And while the 10YR is certainly getting all the attention, the yields are expanding all across the yield curve, with mid duration treasuries seeing a major difference from one year ago.
The 10-year now yields about 119 basis points more than the one-month Treasury, which stands at 3.874%.
Investors are demanding considerably more yield to lend for a decade than for a month.
The 2YR went from close to 3.5%, to now 4.87%.
The effects are already starting to be felt, particularly in the housing market.
For the week ended September 18, the Mortgage Bankers Association reported that the average contract rate on a 30-year fixed mortgage rose to 7.12%, its highest level since May 2024.
Mortgage applications also fell 1.5% from the prior week.
As a reference, for a $500,000 home with 20% down, the buyer would borrow $400,000. At 2.67%, the 30-year mortgage rate Freddie Mac reported at the end of 2020, principal and interest would be about $1,616 a month. At the latest 7.12% rate reported by the Mortgage Bankers Association, it would be around $2,694 a month.
That's roughly $1,078 more each month, or nearly $13,000 more per year, for the same home price and down payment.
The bond market is in control of this economy.
“By combining the judgment of millions of people, the bond market is the world’s cleverest economist, its best political analyst, its most prescient corporate strategist, and its finest scientist.” — Robin Wigglesworth