With the rates on the 10yr Treasury at 7 month highs we are seeing rates for 30yr Fixed Mortgages on the rise. If you are in the market to purchase a home or to refinance your current mortgage I strongly suggest that you look into locking your rates. Contact me directly for more information (see this story below)


Treasury yields at 7-month highs

Government debt prices tumble as stocks rally, new debt is prepped for auction and Russia says it will sell some of its holdings.

By Catherine Clifford, CNNMoney.com staff writer
June 10, 2009: 9:28 AM ET

NEW YORK (CNNMoney.com) -- Treasury yields soared to 7-month highs Wednesday as global stocks rallied, the government prepared to sell $19 billion in 10-year notes and Russia said it would reduce its share of U.S. debt.

The benchmark 10-year note fell 10/32 to 93-23/32, and its yield rose to 3.90% from 3.86% late Tuesday.

The benchmark yield reached as high as 3.93% before retreating. The yield was at its highest levels since settling Nov. 3 at 3.96%. Bond prices and yields move in opposite directions.

The 2-year note dipped less than 1/32 to 99-5/32, and its yield was 1.32%. The yield on the 3-
month note held steady at 0.18%.

The 30-year bond sank 27/32 to 92-21/32, after being down more than a point earlier. Its yield jumped to 4.71% from 4.65%.

Stock rally: Stocks were higher throughout the world, and were set to open with gains in the United States. Asian indexes ended up between 2% and 4% and European markets were up between 1% and 2% at midday.

Investors tend to buy rallying stocks because they offer greater returns than government debt.
Debt sale: The government continued to sell large amounts of debt to fund the stimulus aimed at boosting the economy. On Wednesday, $19 billion in a reopened 10-year note was slated for auction.

The government sold $35 billion in 3-year notes Tuesday in an auction that met with strong demand from investors.

But one analyst said the performance of the 3-year sale was not necessarily a harbinger of the 10-year reopening.

The 7-year gap in maturity "changes the landscape," said Nick Kalivas, vice president of financial research at MF Global. "Furthermore it has been noted that investors have been rolling down the curve," or putting a premium on shorter dated notes.

Debt prices have fallen under the weight of supply. As prices have fallen, however, yields have shot higher, boosting home mortgage rates with them.

In an effort to combat the mortgage rate rise, the government is buying back debt. The Federal Reserve was scheduled to purchase an undisclosed amount of debt Wednesday as part of its $300 billion quantitative easing campaign.

Russia: Also weighing on Treasury prices was Russia's announcement that it will reduce the share of U.S. debt in its forex reserve holdings, according to Reuters.

About 30% of its $404 billion in reserves are held in Treasurys, Reuters reported. A Russian official said the Treasurys were purchased as a safe haven during the height of the international banking crisis, and will be sold in order to purchase International Monetary Fund bonds and investments in commercial bank deposits.

Lending rates: One key bank-to-bank rate moved lower. The 3-month Libor edged to 0.64% from 0.65%, according to Bloomberg.com.

The overnight Libor rate ticked down to 0.26% from to 0.27% the day prior.
Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money. The closely-watched benchmark is used to calculate adjustable-rate mortgages. More than $350 trillion in assets are tied to Libor.

reposted from cnnmoney.com by Joseph Sloboda