What the Sell-Off in Treasuries Means for Your Mortgage

In the Treasury market, following several consecutive days of deteriorating conditions, market participants reported an acute decline in market liquidity. A number of primary dealers found it especially difficult to make markets in off-the-run Treasury securities and reported that this segment of the market had ceased to function effectively. This

Back during the March 2020 sharp stock market crash, investors initially fled into bonds as one would expect in a risk-off crisis, meaning that bond yields went down and bond prices went up. But then as the dollar index spiked, the crisis became bad enough that there became a large number of forced sellers of bonds in order to get dollars and servi

Item #2: Fixed Consumer and Corporate Rates

Homeowners and investment-grade corporations termed out their debt a lot longer than the federal government has. Many homeowners have locked in 30-year mortgages. Many corporations have average corporate bond durations of ten, twenty, or thirty years as well. As interest rates rise, these homeowners and

What should we do about this fact? Does this throw off market signals about what the bond market is telling us, since the “bond market” in reference to actual private bond investors is less than half of the recent Treasury demand, while a semi-government institution is more than half of Treasury demand, against a backdrop of record Treasury supply

A likely test question would point out that a direct obligation of the US Government trades at a lower yield than a security issued by a mere government sponsored enterprise such as FNMA or FHLMC.