Fed's Bostic on the long-term rates surge
Add Axios as your preferred source to
see more of our stories on Google.
Atlanta Fed President Raphael Bostic. Photor: David Paul Morris/Bloomberg via Getty Images
It's been an eventful 36 hours for the bond market.
Driving the news: Longer-term U.S. interest rates spiked Tuesday as a report showed a surprisingly high number of job openings and the House of Representatives removed Speaker Kevin McCarthy, adding to the sense that further government dysfunction is inevitable.
- Wednesday morning, the rate on the 30-year Treasury note breached 5% for the first time in 16 years. The average 30-year fixed-rate mortgage reached a new two-decade high of 7.72% Tuesday, per Mortgage News Daily.
- But rates are down slightly Wednesday, after payroll processor ADP said private employers added only 89,000 jobs last month.
Between the lines: It appears markets are on a hair-trigger for evidence of whether the economy is still going gangbusters (as the job openings Tuesday implied) or slowing down (as the ADP number did Wednesday).
- It makes the stakes for Friday's September jobs report all the higher.
What they're saying: On Tuesday, we asked Atlanta Fed president Raphael Bostic about the rise in long-term rates on a conference call with reporters. He noted that longer-term yields "haven't been acting in a typical historic pattern."
- "It's a complicated part of the [yield] curve right now. There's a lot going on, and I can't say I have all the answers on what's happening here. I do think as we get the economy back into balance, I'm expecting all of these relationships to get back to more normal patterns," said Bostic. "I try to look through a lot of the more peculiar aspects of it."
- "Am I hearing signs from people that these long bonds are really creating tough things for businesses and financial markets?" Bostic said. "I'm not hearing that today in a way that's outsized to what would be happening in an ordinary tightening cycle."
