We did our first post on 10/19/2021 observing significant shifts in short term interest rate markets. A month later, we wrote about how this trend had continued as market participants priced in more hawkish central banks globally. This trend has continued almost unabated, and this post will provide an update on how rates markets have evolved since then.
2 Year Treasury
The U.S. 2-year treasury yield currently sits at 2.3% vs .13% less than a year ago, reflecting expectations for more near-term rate hikes.
10 Year Treasury
The U.S. 10-year treasury yield now exceeds pre-pandemic levels, currently at 2.5%
2-10 Year Spread
The spread between the 2 year treasury yield and 10 year treasury yield is often used as an economic barometer, signaling with a 6-18 month lag that a recession may be coming when it is negative (2 year yield higher than 10 year yield. It is currently still positive, but approaching zero.
30 Year-Treasury Yield
The 30-year is the longest duration on the U.S. treasury curve is currently at 2.6%.
30-Year Fixed Mortgage
The average rate for newly issued 30-year fixed rate mortgages sits a 4.42%, nearly 2% above the lowest level from 2021.
The Bottom Line
While U.S. rates are still below 2018 peak levels, the economic regime today is clearly different than the one the last few years. This can impact your financial planning and investment portfolios in different ways – from increased monthly payments when purchasing a new home to losses in fixed income investments (along with new opportunities in the asset class). Want a second opinion on your financial scenario? Please feel free to reach out to us at amber@invariantinvestments.com