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Mortgages are close to 4.125% — did Donald Trump do that?

How the global bond move-up, the Federal Reserve and the election are affecting rates
Published on Nov 18, 2016
  • Upward movement in both German and Japanese bond helped push rates higher in the U.S.
  • The Fed will go to 0.75 percent on December 14, and authentic signs of wage growth mean that the Fed is an even-money bet to hike 0.25 percent every 90 days in 2017.
  • We can hope for temporary downward corrections and a low cycle-top if Trump offers strong support for the Federal Reserve and for budget discipline. Without that, this is going to get uglier.

The U.S. 10-year T-note is rising in yield again, now 2.35 percent, up a half-percent since election day. Mortgages are rising accordingly, close to 4.125 percent.Did Donald Trump do that? We have some recent experience with black swan events, but not with a bird sporting an orange comb-over.The global move-up Part one: A global move up in long-term bond yields began in summer.The low for Japan’s 10-year on July 27 was -0.29 percent (note minus signs); on U.S. election day, it had risen to -0.064 percent.The German 10-year bottomed at -0.19 percent on July 8; by election day, it had risen to 0.21 percent -- almost as big an increase as the U.S. 10-year after election day.Donald Trump had nothing to do with that. Since election day, those two bonds have moved little, and ours caught up.That global rise was caused by the ECB (European Central Bank) and BOJ (Bank of Japan) both confirming intent to push inflation up, continuing to buy IOUs from the market, bu...

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