US Mortgage Rates fall for the first time in 11 weeks!
The average MBA 30-Year Mortgage Rate for the week ending October 28th fell to 7.06%. This was the first weekly decrease in the benchmark rate in 11 weeks. The previous week’s reading of 7.16% was the highest since 2001. With interest rates this high, the US housing data for September fell in most of the key data points as home buyers moved to the sidelines. Pending Home sales were down 10.2% MoM vs a previous reading of -1.9% MoM. New Home Sales were down 10.9% MoM vs an August reading of +24.7% MoM. Finally, Existing Home Sales were down 1.5% MoM vs -0.8% MoM in August. On the bright side for buyers, the S&P/Case-Schiller Home Prince Index fell 1.6% MoM, although this hardly makes up for the jump in interest rates. The big question housing buys want to know is “Will interest rates fall further below the 2001 levels anytime soon?”
30 Year Mortgage rates in the US are based primarily off the 10-year US Treasury Yield. After breaking above a symmetrical triangle (red) early in 2022 near 1.69%, yields began moving aggressively higher. Yields moved to 3.497% on June 14th and pulled back to 2.56% in August 2nd. This set up an ascending wedge formation. Expectations are that the yield will break lower out of an ascending wedge. However, as price neared the apex, it initially broke above the formation on October 20th, reaching a high of 4.335% on October 21st. Notice that the RSI was diverging with yields in overbought territory. Thus, yields have since pulled back to the bottom trendline of the wedge, making a near-term low of 3.90%.
Source: Tradingivew, Stone X
Trade 10 year Treasury bonds now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Heading into the November FOMC meeting, the US 10-year Yield has pulled back and is oscillating around 4%. If the key yield breaks higher after the FOMC meeting, first resistance is at the lows of October 24th near 4.13%, then the top trendline of the long-term wedge near 4.23%. If yields continue higher and breakthrough the October 24th highs of 4.335%, they could be on the way to 4.473%, the highest level since November 2007! However, if the resistance holds and 10-year yields move lower, the first support is at the 38.2% Fibonacci retracement level from the lows of August 2nd to the highs of October 21st at 3.64%. Below there, yields can fall to the highs of June 14th at 3.497% and then the 50% retracement of the previously mentioned timeframe at 3.426%.
Source: Tradingivew, Stone X
When will the housing market turn up again? This will most likely be after mortgage rates move lower, which will depend on the movement of the US 10-year treasury yield. Watch the Fed later today. A 75bps rate hike is already priced. However, traders need to pay attention to the statement and the press conference which follows to determine if the Fed will slow the pace of hikes moving forward!
Learn more about forex trading opportunities.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024