Treasury Sell-Off Further Steepens Yield Curve

Treasury prices were already falling before the Mortgage Bankers Association reported this morning that Mortgage Applications fell 11.4% for the week ending February 19th. It was pretty cold last week. Applications for New Purchase loans fell 11.6% to a nine-month low while Refis were down 11.3%. A little later, the Census Bureau is expected to report that, in January, New Home Sales rose slightly. The Treasury will be selling $61B Five-Year notes this afternoon.

Meanwhile, the Long Bond’s price is down about 1 5/8 points and that has pushed the yield up to 2.26%. The Ten-Year has slipped about a half-point, resulting in a yield of about 1.39%. In the short-end, not much has changed and the Two-Year is yielding around 12 basis points. Crude oil is up slightly to $62 while gold has rallied a few dollars to $1,801. Equity futures are mildly in the green. Fed Chairman Jerome Powell will complete this week’s two-day Congressional testimony with an appearance before the House Banking Committee.