Industry NewsMortgage

Mortgage rates spin out of control

Fed calms bond market with words on inflation

Don't miss the real estate event of the summer
Join 4,000 real estate pros at Connect SF, Aug 7‑11, 2017

The rapid rise in long-term interest rates that began two weeks ago today was spinning out of control Wednesday morning, pushed by news of inflation and a double-the-forecast report of March retail sales. However, a spate of contrary data this morning coupled with a pair of Federal Reserve speechettes has returned the bond market to a normal, befuddled state.   Shortly after "...CPI plus .5 percent... core plus .4 percent..." scrolled across screens, the 10-year T-note yield exploded to 4.46 percent, taking mortgages to 6 percent-plus, and hurting Fed-sensitive 2- and 5-year T-notes even more. That yield-curve flattening further closed the gap between the adjustable- and fixed-rate mortgage rates. Market debate on the Fed's intentions centered between a June tightening and an August one, and yields implied a pricing-in of two .25 percent hikes by fall.   Perverse-movers confirmed the market attitude, reversing inflation bets as soon as the fact appeared. You run up the price ...