Billy Abrams Sees 10-Year Yield Falling to Mid-3% if Fed Delivers Surprise September Hike
Updated
Updated · Mortgage Professional · Aug 20
Billy Abrams Sees 10-Year Yield Falling to Mid-3% if Fed Delivers Surprise September Hike
1 articles · Updated · Mortgage Professional · Aug 20
Summary
Abrams said a surprise Fed rate increase in September could spark a Treasury rally that pulls the 10-year yield from near 5% back to the mid-3% range, easing mortgage rates.
His call comes even after 10-year Treasury yields rose more than 5 basis points Thursday, with FOMC minutes showing growing concern that the Fed may still need to tighten to fight inflation.
Using Elliott Wave analysis, Abrams argues the market is in the late stage of a corrective "B wave," with the 10-year topping near 5% and the 30-year heading toward 5.50% before reversing lower.
He said mortgage spreads should tighten versus Treasuries because mortgages return principal monthly, but he remains bearish longer term, projecting the 10-year eventually climbs to 7% or 8% after the rally.