U.S. Yield Increase in February Hurts Bondholders to Homebuyers
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(Bloomberg) — From bondholders to home buyers, this month’s jump in Treasury yields is starting to bite. U.S. government debt has fallen 1.9 percent in February, headed for the biggest monthly loss since May 2013, based on Bloomberg World Bond Indexes. U.S. mortgage rates increased this week. Benchmark Treasury yields are climbing as investors prepare for the Federal Reserve to raise interest rates. “Yields will go up,” said Yoshiyuki Suzuki, head of fixed-income in Tokyo at Fukoku Mutual Life Insurance Co., which oversees the equivalent of $53.5 billion. “The U.S. economy is relatively good. The central bank will raise interest rates.” The 10-year yield was little changed at 1.98 percent as of 10:02 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2 percent note due in February 2025 was 100 5/32. The yield has climbed 34 basis points this month.
The average rate for a 30-year fixed mortgage in the U.S. rose to 3.69 percent for the seven days ended Feb. 12 from 3.59 percent the previous week, Freddie Mac said in a statement Thursday. It was the biggest increase since September. The Fed will raise its benchmark interest rate in about seven months, according to a Morgan Stanley index.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Nicholas Reynolds, Naoto Hosed