US Treasury Yields Soar to Highest Levels Since 2002, Mortgage Rates Skyrocket
US Treasury yields have surged to their highest levels since 2002, driving up mortgage rates to nearly three-year highs. The yield on the 10-year Treasury bond rose as high as 5.34% in early trading, while the 30-year yield spiked to 5.69%. These increases are largely attributed to inflation stemming from rising energy prices due to conflicts in Iran and Ukraine.
The average regular gas price in the US remains 47% higher than it was in late February when the Iran war began, while diesel prices have soared 70% over the same period. This has led to concerns about affordability for consumers, particularly prospective homebuyers.
President Donald Trump is considering a ban on US exports of diesel, but experts warn that this would only drive up prices further. The Federal Reserve's favorite inflation indicator, the PCE index, rose 3.4% on a year-ago basis, less than expected, but economists attributed this to a technical change in data calculation.
Despite some relief seen in the PCE index, many economists agree that affordability remains a major problem for consumers. The rise in mortgage rates has put the American Dream further out of reach for millions of hopeful homeowners, with the level of homes on the market sitting unsold recently reaching its highest level in over a decade.