Treasury Yield Hits Record Lows

The benchmark 10-year Treasury yield had fallen to record lows and was at 2.83% as of late Monday morning. "The Treasury market continues to move to record low yields as preservation of capital and expectation of deep global recession dominates psychology," according to a Monday morning report by Jefferies & Co.'s fixed income division. Historically, a drop in the 10-year Treasury yield has been indicative of low mortgage rates and a refinancing boom but expectations for these have been muted in the recent environment by generally wider spreads to mortgage product, tight underwriting and illiquidity. The latest Mortgage Bankers Association's application index registered a slight decrease in refinancing but it is a lagging indicator that may not yet have reflected a recent drop in mortgage rates. During the week ended Nov. 21, the index showed refis slightly lower compared to the previous week as well as on a seasonally-adjusted four-week moving average basis. But refis still represented close to half of all applications. Purchases also were down slightly.