The rate-indicative 10-year Treasury yield as of Friday just before noon had continued its upward movement to a point notably higher than the range it had been in previously, but hedged players in the industry so far appear to be weathering the move relatively well.
The 10-year was as high as about 2.35% at one point Friday morning. It has not been much above 2.1% since late last year, according to Yahoo Finance data.
Les Parker of industry hedging consultancy Parker & Co. said the recent increase in bond yields and rates, was "pretty fast," but it really wasn't a move that was outside expected ranges, and based on what he has heard from his clients, there were “no major blowups.”
“If you went another 25 or basis points from here it's going to create a problem. Production is just going to dry up,” said Parker, who said mortgage movements have been tight to those of Treasuries.
Most forecasts have been calling for a gradual increase in rates this year, and the 30-year rate had a weekly average of 3.92% that was four basis points higher than the previous week in Freddie Mac's most recent survey.
Some have begun to wonder, as is often the case when rates rise notably, whether the eventual cyclical shift to an upward rate trend has gotten underway. While it is possible, and forecasts suggest it could occur some time this year, at the moment this looks like it may not be it, Parker said.
The 10-year yield had receded slightly from its high as of just before noon Friday.
