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Jobs Reports Drives Down 10-year Treasury Yield

Jobs Reports Drives Down 10-year Treasury Yield30-year at 5.63%, apps rise on stronger refis

February 4, 2005


The 30-year fixed rate and the 1-year ARM moved in opposite directions once again, but economists project both will rise over the long term. For the short term, however, a weak jobs report sent long-term Treasury yields tumbling.

Slipping three basis points within the past week, the 30-year fixed-rate mortgage average came in at 5.63%, according to Freddie Mac’s latest Primary Mortgage Market Survey.

The average 15-year fixed rate reportedly remained unchanged at 5.14%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage average edged down two BPS to 5.00%, Freddie said.

The one-year ARM continued the upward path it has taken since the beginning of the year, increasing five BPS from last week to 4.23%.

“Not surprisingly, the one-year ARM rose on the expectation that the Fed would raise rates once again when they met last week,” said Freddie chief economist Frank Nothaft in a written statement. “We will probably see the ARM rise a little more over the next few weeks in anticipation of further rate increases by the Fed while the long-term fixed rates remain fairly flat.”

For the quarter, however, the Mortgage Bankers Association predicts the 30-year will average 6.0%, Freddie has it at 5.9% and Fannie Mae at 5.8%, according to each of their latest mortgage outlooks.

In line with the forecasts, 45% of the 100 industry bankers, brokers and other individuals surveys on a weekly basis expect rates to rise over the next month and a half, one-third predict a downturn and the remaining 22% think they’ll stay about the same.

During the week ending Jan. 28, the stack of applications grew 7%, pushing the Market Composite Index up to 706.4, according to the MBA’s latest applications survey. At this time last year, when the 30-year averaged nine BPS above its current level, the measure of application activity was also higher at 855.7.

As purchase money request activity increased slightly in the most recent one-week period, MBA said more borrowers went to apply for a refinance on their loan — as reflected in the 17% week-to-week boost in the Refinance Index. Accordingly, the refi share of total applications edged up to 49%.

Meanwhile, the ARM share of total applications nudged up to one-third of applications.

Early Friday, the 10-year Treasury-bond was trading at 101.28, with the yield tumbling 8 BPS from yesterday to 4.08%. Today’s Treasury activity is being driven by a weaker-than-expected employment report.

Coco Salazar is an assistant editor and staff writer for

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