What factors are keeping mortgage rates down?

Negative data from August and global economic factors are both responsible
  • Domestic data from August looked poor, and global bond yields are back below zero.

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In late September, the 10-year T-note returned to its July to early-September range, 1.50 percent to 1.60 percent and holding mortgages near 3.50 percent. At the end of last week, the market was testing the top, and this Friday’s job data will be definitive. Helping rates to stay down: more negative data from August, personal income slow, spending flat; core personal consumption expenditures (PCE) inflation 1.7 percent year-over-year and decelerating, August rising only 0.1 percent. From Japan to Germany Global bond yields are back below zero, German 10s minus 0.118 percent, Japan’s minus 0.075 percent. If the Bank of Japan (BOJ) intends to keep its week-old promise to continue its $80 billion per month easing but hold Japanese government bond (JGB) 10s at 0 percent, the only way to push the yield back up to 0 percent is to sell some of the bonds it owns, or stop buying -- either way, a monetary tightening. The BOJ is cornered, off into fantasy-based policy. Ge...