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10-Year Treasury Yield Closes At All-Time Low

The yield on the 10-year Treasury broke through a psychological threshold and plunged to its lowest level on record.

Hurt by global financial markets and lingering concern over U.S. employment data released last week, U.S. stocks tumbled a hundred points Tuesday. Still, the Dow Jones Industrial Average had been down more than 200 points in early trading.

Investors moved their cash to the U.S. Treasury market, driving up Treasury prices and dragging down Treasury yields.

The yield on the benchmark 10-year Treasury closed at 1.98 percent today.

It was the first time the yield has fallen below 2 percent based on Federal Reserve data back to 1962. It was also the lowest level on record for the closely watch security.

Interest rates on fixed-rate mortgages tend to track the 10-year Treasury yield.

Freddie Mac reported the average 30-year mortgage at 4.22 percent last Thursday, when the 10-year Treasury yield was 2.15 percent.

While today’s decline might suggest that a 17-basis point improvement is ahead for the 30-year mortgage, the spread between Treasury yields and mortgage rates has been widening as of late as lenders look to moderate exploding refinance volume. Still, the market movement means mortgage rates will likely be lower in this week’s report.

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