Hot economic data sends mortgage rates to yearly highs

The Fed struck an even more hawkish tone today, but improving mortgage spreads helped prevent rates from climbing further. Even so, mortgage rates reached a new high for the year, while the 10-year Treasury yield hit a level not seen since 2006. So, what drove today’s surge? Oil prices rose a few dollars, but they remain well below their yearly highs. The bigger story was a combination of hot economic data and an increasingly hawkish Fed. Those are precisely the two conditions I highlighted over the weekend as potential catalysts for pushing mortgage rates toward 8%. Today, we got both.Lets review what happened today. Hot PMI manufacturing data “US business activity growth accelerated for a fourth successive month in September to reach the fastest rate for over five years. A further surge in service sector business activity was accompanied by a renewed improvement in manufacturing output growth.”S&P Global US Flash PMI® Both the service data and now the manufacturing data are both on fire, with inflation above target. It’s been a while since we had a breakout growth print here. But this is happening right when the Fed started a new rate-hike cycle, something I wrote about recen...