It is the morning after the Fed panicked and lowered its lower bound for The Fed Funds Target rate to … 0%. Here is Fed Chair Jerome Powell calling to The Fed to take evasive action!
The result? US Treasuries yields are falling like a rock. US Treasury 10Y yields are down around 20 basis points this morning.
And unless lenders lower their 30-year mortgage rates, the spread between Bankrate’s 30 year average mortgage rate and the 10 year Treasury yield is at its highest level since Q4 2008, the epicenter of the financial crisis.
This morning before the US equities markets open, Europe is already down around 7% – 8%.
Here is Fed Chair Jerome Powell wishing us all the best!
The Washington Post had a howler of a story yesterday: “U.S. markets post big gains as Joe Biden’s Super Tuesday surge offers coronavirus respite”
It that was true, it was a very short-term effect given that the Dow dropped 800 points this morning.
Or was it something else … like the IMF throwing $50 billion at the Coronavirus. And more stimulus from Central Banks like The Federal Reserve? But those effects were short-lived too.
The US 10Y Treasury yield fell another 12.6 basis points this AM to 0.926%. The lowest in history.
And Freddie Mac’s 30Y mortgage survey rate (green line) continues to follow the 10Y Treasury rate down the rabbit hole.
How long will rates go?
I want to thank Rick Sharga for remembering that I was one of the few that predicted what is happening today with interest and mortgage rates while most others predicted mortgage rates would rise above 8%.