Mortgage rates have stabilized below 6.5 percent for the low-fee deals, but the underlying Treasury-bond market continued to deteriorate. Yields on U.S. Treasurys drive all interest rates everywhere, except in moments when the proud owners of $5 trillion worth of mortgages try to protect themselves by short-sale hedging in the smaller, $3.5-trillion Treasury market. The last two months have been one of those moments; 10-year T-notes reached 4.84 percent at mid-week, and haven't done better than 4.77 percent since. A full percent rise in 60 days... There wasn't anything in new economic data to cause more damage, but neither was there anything to deflect the Fed's march toward neutral–wherever neutral might lie. An increase from today's 1 percent to 1.75 percent by the end of this y...
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