The yield on the 10 year treasury note has risen 0.25% in the last two days. The yield is now above 4.5%, topping October 2007 highs, and mortgage rates are following suit. The higher for longer script is unfortunately playing out just as expected.
As the MLB wildcard race is coming to a conclusion this week to determine which teams will battle it out in the Wild Card Series next week, the economic wildcard that may bring down interest rates sooner than they otherwise might is the potential shutdown of the US government commencing this weekend. In theory, rates drop when uncertainty reigns, and having a congress divided over budget issues to the point where four million Americans may go without a paycheck or two is dubious to be sure. Hence, rates could see some relief next week.
On the flipside, an otherwise strong labor market (except in Detroit and now probably D.C.) and rising crude oil prices may keep inflation elevated for longer, increasing the possibility of another rate hike by the Fed in November.
