Mortgage rates and the 10-year Treasury bond

I always tell my clients, that if you want to know where mortgage rates are heading, follow the yield on the 10-year T bond.

When the price of the 10-year T bond falls, its yield rises, and when yields on the 10-year T bond rise, mortgage rates generally also rise. It isn't a hard and fast rule, but it will give you an general idea.

To follow the T-bond yield, check Yahoo's Composite Bond Rates service.

August is generally a pretty quiet month in the bond market. Traditionally bond traders take the month of August off for vacation and not much happens, even with some "less than stellar" economic news. However, the traders are back and the bond market is seeing some weakness (as bond prices go down interest rates go up & vice versa). Yields on the 10 year t-bond are up to a resistance level around 4.57%. It appears that if the yield breaks thru 4.6% it will probably go to 5%.

The key economic report this week is the unemployment report due on Friday.

Rates are still pretty flat from the 25th, looks like about an eighth better in rate for a 30 day lock today.

Posted by bruce at September 2, 2003 11:22 AM