Rates Stuck in The Middle
Rates are on hold until the next chapter is written in the complex saga of covid versus the market. This isn’t to say rates perfectly flat–simply that the prevailing momentum has been sideways for the past few weeks.
Since mortgage rates only change once or twice a day, we can use 10yr Treasury yields to see finer detail. This entire week took place in the fairly narrow range of 1.29 to 1.21, and it ended with yields precisely in the middle at 1.25%.
What’s the point? Bonds (and thus “rates”) are muddling through a period of indecision as they wait for clarity. Bonds ultimately care most about things like the economy and Fed policy. In turn, the economy and the Fed have a lot riding on the covid outlook.
The burning question: Will the delta surge do even a fraction of the damage to the economy seen during the initial covid surge?…(read more)
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