Two questions I have about the last weeks treasury action. 1) Will this continue, or is this just people liquidating treasuries for temporary reasons? 2) Just how high will the yield on 10yrs go, and what will be the impact on housing?
I think it remains to be seen if treasury yields will continue to rise. They’ve given reason to believe they were going to rise several times in recent years, but always came back down before getting very far out of hand.
Given the unattractiveness of mortgages to most investors now (the US Govt. not included) what would happen to mortgage rates if 10yrs went to 5%, what about 10yrs at 6% or even more? Is it safe to assume that mortgages (30yr fixed) will stay at rates at least a couple percent above 10years? How will we have a housing recover if mortgage rates go up?
If rates do go up, will the government still be able to pursue all these bailouts? Could the fed start buying 10yrs to drive down long term rates? If so, wouldn’t they have to print money to do that, causing more problems?
