The improbable Trump victory on Tuesday has prompted a rally in the stock market but set off a firestore in the bond market with the yield on the 10-year Treasury note rising to 2.11 percent on Thursday from 2.07 percent on Wednesday. This represents the largest single-day increase since 2013. Investors have been trading bonds aggressively since the election to hedge against a possible increase in interest rates in the near future.
The selloff in government bonds has pushed mortgage rates to their highest levels in seven months with conforming no-point 30-year fixed rates averaging 3.625 percent while the 15-year rate is near 2.875 percent. Rates for home loans tend to fluctuate with yields on the 10-year note.
Economists attribute the shakeup to the market's anticipation that a Trump Administration will spur an economic stimulus. The president-elect is expected to increased government spending, invest in infrastructure improvements, lower taxes and ease federal regulations all, of which would boost the supply of bonds. Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.