Friday, October 15, 2010
Alright - no prizes for guessing why I'm studying these (data from Fred).
Still, it is a pretty interesting graph, no? Lowest rates since who knows when. Clearly the bond market is not anticipating a lot of inflation in current decades.
Looking at the last five years worth of data only, there is no immediate sign of a slowing of the pace of fall in rates that has been going on since the spring of this year.
I guess I'm wondering if a major issue for the future of this series is politics. The mortgage market is still massively affected by government involvement (FHA, Freddie Mac, Fannie Mac). I imagine a Republican house of representatives will be likely to push back on that involvement, which in turn might lead to higher mortgage rates, though I guess that could take a while to translate into any actual changes in policy.
On the other hand, the Federal Reserve is contemplating further quantitative easing (buying long term bonds with a view to further lowering rates on long term debt). Anticipation of this is likely to be a significant factor in the recent fall in rates.
Anyway: happy, happy data :-)