That sound you hear is not the roar of competing Manchester United and Barcelona supporters; rather, it is the sound of current bloodbath in Treasuries.
The 10-year hit 3.709 per cent – a level not seen since November 2008 – while the benchmark yield curve steepened to a record 275bp compared with 263bp on Tuesday.
The benchmark yield curve is the gap between the yields on the two-year and the 10-year notes; the previous record of 274.7bp was reached on August 13 2003.
Rick Klingman, head of Treasurys at BNP Paribas in New York, told Dow Jones “mortgage related selling” was the driving force:
Market participants “never thought Treasury yields could get up this high given Fed buying,” Klingman said
CalculatedRisk, meanwhile, notes that with the 10-year hitting 3.7 per cent, mortgage rates will be increasing:
Based on [the] historical data, a Ten Year yield at 3.7% suggests a 30 year mortgage rate of around 5.6%.
Related links:
Treasury investors take “sell in May” adage to heart – FT Alphaville
On the not-unlimited appetite for government bonds – FT Alphaville