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The Knudson File: 10 Year US Treasury Rates Increased 17 BPS

10 Year US Treasury rates increased 17 basis points for the week ending April 14th, 2022 (48 bps for the past 2 weeks). 30-year Treasury was up a 23 bps, which is a large increase. This will affect the following sectors:

  • Bond investment funds—good news is next quarter-end mark-to-market is way off at June 30, bond fund managers won’t have to report the carnage till then.
  • 401 plans—-Baby Boom, they are in retirement years and have gone conservative bond funds–hammered.
  • US deficit interest carries costs
  • on Commercial real estate and cap rate levels

After all this——–the Yield Curve remains virtually flat. This is going to be ugly. So much of the economy AND asset values are tied to 10-year US Treasury rates. It is THE common denominator.

Lending Rates and Borrowing Costs

30 yr-10 yr 237 69, As of: 4/14/22

MORTGAGE RATES ARE NOW OVER 5.00% For the 7 days ending April 14th, 2022, 10-Year Treasury rates increased 17 bps while mortgage rates were up 28 bps. This caused the net spread to Increase 11 bps to 69 bps ABOVE the normal spread of 168 bps. Bond investors are trying to get ahead of the Fed’s future moves. Rates ROCKET up and feather down. The change in mortgage rates is ALMOST a 3 sigma change (28 vs 31).

10-Year Treasury Rate

Daily changes in the US 10 Year Treasury rates are the blue bars while the red line is the 14-day cumulative change in rates: 35 bps increase. For the blue bars, it is unusual to have changes of greater than 0.10 in a single day and 0.20 is VERY unusual.

2022 Recent Yield Curve Changes

The Yield Curve increased this past week (the red line is current and the green is last week). NOTE the 23 bps INCREASE in the 30 year—that is HUGE. The Yield Curve is virtually flat and last week’s slight inversion is now gone.

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