Here’s the number everyone in the financial markets is obsessing about and why

Real Estate

Wall Street is abuzz this week amid a surge in the yield for the benchmark 10-year Treasury note, which has repeatedly topped levels not seen since 2011 over the last few days.

But while the multiyear highs above 3 percent are notable by themselves, bond traders are also impressed by how quickly rates have broken above those key technical levels. The yield on the 10-year note has climbed about 15 basis points this week alone after trading in an innocuous range around 2.8 percent for much of summer 2018.

While short-term interest rates are most sensitive to the activity of the Federal Reserve — which hiked the federal funds rate a third time for the year in September — the market dictates long-term rates.

It is used as a benchmark for many other types of debt, including corporate and agency bonds, such as Fannie Mae and Freddie Mac. Movements in the 10-year government rate can also have a direct impact on consumers.

The rate is a barometer for 30-year fixed mortgage rates, auto loans, student loans and credit card annual percentage rates.

The long-term chart of these rates shows how they all move in tandem with the 10-year yield.

10-year Treasury rate vs. mortgages, auto loans and corporate debt (click to enlarge)

Source: Board of Governors of the Federal Reserve, Freddie Mac. Retrieved from FRED.

The average 30-year fixed-rate mortgage rate decreased 1 basis point to 4.71 percent last week, just off the highest level in seven years, according to Freddie Mac.

Here is a list of the financial instruments the 10-year Treasury yield impacts:

  • Corporate bond rates
  • 30-year fixed-rate mortgage rates
  • Credit card annual percentage rates
  • Auto loans
  • Student loan rates
  • Personal loan rates
  • Savings interest rates

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