Treasury surge adds pressure to home-loan rates

Home financing costs face renewed pressure after the 10-year Treasury reached 5.347% on Monday. That was a 7-basis-point jump and its highest level since April 3, 2002. The 30-year bond touched 5.702%, a level last recorded in May 2002. Mortgage lenders use the 10-year note as a key reference when setting loan rates, so sharp market moves can quickly reach borrowers.

Friday’s weak September employment report briefly eased that pressure. The economy added 29,000 jobs, and the 10-year yield fell to roughly 5.18%–5.21% before recovering to 5.252% later that day. On Monday, September’s services data showed a 54.9 reading. The report’s pricing measure increased 1.4 points to 74, adding to inflation concerns during a bond selloff that had already lasted six weeks.

Attention now turns to records from the Fed’s September 19–20 meeting, scheduled for Wednesday at 2:00 p.m. Markets will look for signs that policymakers believe rising bond yields are tightening financial conditions enough to reduce the need for another increase. FedWatch put the chance of unchanged rates at the next meeting at 82%. Economists cited in the report said softer hiring could support a pause, while persistent inflation makes a near-term reduction unlikely.