Mortgage Rates Raise Slightly, Treasury's Slip Ahead of Record Auction

As reported by Reuters -- U.S. Treasury debt prices eased Friday as investors maneuvered to cut prices ahead of next week's record-large wave of government notes supply.

Shorter-dated Treasury's were also undermined by recent signals the Federal Reserve may be beginning to at least mull how it will dismantle massive amounts of fiscal stimulus and pave the way for higher interest rates.

Losses were limited, however, by weakness in the stock market, which propped up the safe-haven appeal of U.S. government debt.

Benchmark 10-year Treasury notes, which are good indicators of what San Antonio mortgage rates are doing,  were trading 14/32 lower in price to yield 3.48%, up from a yield of 3.42% late Thursday. Treasury yields move inversely to prices.

"What the Fed is doing right now is laying the groundwork to gently break it to everybody that they are not going to be near zero forever ... and that just gets us one step closer to moving to higher interest rates," Caron said.

But even amid the discussion of possible changes in the Fed's policy language and what that would mean for the timing of changes to the benchmark federal funds rate, few expect the U.S. central bank to hike rates any time soon.

"Our forecast remains that the Fed will lift rates toward the end of next year," said Tom Porcelli, U.S. market economist with RBC Capital Markets in new York. "Removal of accommodation will come when the core data, namely employment, improve."

The safe-haven appeal for bonds was undermined Friday by data showing sales of previously owned homes surged to the highest level in over two years in September.

The National Association of Realtors said sales surged 9.4% last month to an annual rate of 5.57 million units, which was well above analysts' expectations of a 5.35 million unit pace.

All this screams Higher Mortgage Interest Rates over the next 12 months and not just San Antonio Mortgage Interest Rates but nationwide.