{"id":29935,"date":"2018-01-20T12:49:40","date_gmt":"2018-01-20T17:49:40","guid":{"rendered":"http:\/\/olduvai.ca\/?p=29935"},"modified":"2018-01-20T12:49:40","modified_gmt":"2018-01-20T17:49:40","slug":"what-will-rising-mortgage-rates-do-to-housing-bubble-2","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=29935","title":{"rendered":"What Will Rising Mortgage Rates Do to Housing Bubble 2?"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"https:\/\/wolfstreet.com\/2018\/01\/20\/whatll-rising-mortgage-rates-do-to-housing-bubble-2\/\">What Will Rising Mortgage Rates Do to Housing Bubble 2?<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Oops, they\u2019re already rising.<\/strong><\/p>\n<p>The US government bond market has further soured this week, with Treasuries selling off across the spectrum. When bond prices fall, yields rise. For example, the two-year Treasury yield rose to 2.06% on Friday, the highest since September 2008.<\/p>\n<p>In the chart, note the determined spike of 79 basis points since September 8, 2017. That was the month when the Fed announced the highly telegraphed details of its QE Unwind.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-38402\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2018\/01\/us-treasury-yields-2-year-2018-01-19.png\" alt=\"\" width=\"483\" height=\"403\" \/><\/p>\n<p>September as month of the QE-Unwind announcement keeps cropping up. All kinds of things began to happen, at first quietly, without drawing much attention. But then the trajectory just kept going.<\/p>\n<p><ins class=\"adsbygoogle\" data-ad-client=\"ca-pub-8212587530282873\" data-ad-slot=\"1767955946\"><\/ins>The three-year yield, which had gone nowhere for the first eight months of 2017, rose to 2.20% on Friday, the highest since October 1, 2008. It has spiked 82 basis points since September 8:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-38404\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2018\/01\/us-treasury-yields-3-year-2018-01-19.png\" alt=\"\" width=\"501\" height=\"367\" \/><\/p>\n<p>The ten-year yield \u2013 the benchmark for financial markets that most influences US mortgage rates \u2013 jumped to 2.66% late Friday.<\/p>\n<p>This is particularly interesting because the 10-year yield had <em>declined<\/em> from March 2017 into August despite the Fed\u2019s three rate hikes last year, and rising short-term yields.<\/p>\n<p>At 2.66%, the 10-year yield has reached its highest level since April 2014, when the \u201cTaper Tantrum\u201d was winding down. That Taper Tantrum was the bond market\u2019s way of saying \u201cwe\u2019re shocked and appalled,\u201d when Chairman Bernanke dropped hints the Fed might eventually begin tapering what the market had called \u201cQE Infinity.\u201d<\/p>\n<p>The 10-year yield has now doubled since the historic intraday low on July 7, 2016 of 1.32% (it closed that day at 1.37%, a historic closing low):<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-38403\" src=\"https:\/\/wolfstreet.com\/wp-content\/uploads\/2018\/01\/US-treasury-yields-10-year-2018-01-19.png\" alt=\"\" width=\"503\" height=\"452\" \/><\/p>\n<p>Friday capped four weeks of pain in the Treasury market. But it has not impacted yet the corporate bond market, and the spread in yields between Treasuries and corporate bonds, and particularly junk bonds, has further narrowed. And it has not yet impacted the stock market, and there has been no adjustment in the market\u2019s risk pricing yet.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What Will Rising Mortgage Rates Do to Housing Bubble 2? Oops, they\u2019re already rising. The US government bond market has further soured this week, with Treasuries selling off across the spectrum. When bond prices fall, yields rise. For example, the two-year Treasury yield rose to 2.06% on Friday, the highest since September 2008. In the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[431,4869,2339,661,8701,662,8625,18026,2721,4254,4255],"class_list":["post-29935","post","type-post","status-publish","format-standard","hentry","category-economics","tag-interest-rates","tag-mortgage-rates","tag-mortgages","tag-qe","tag-qt","tag-quantitative-easing","tag-quantitative-tightening","tag-us-government-bond-market","tag-us-treasuries","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29935"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29935\/revisions"}],"predecessor-version":[{"id":29936,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29935\/revisions\/29936"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}