FDA Clears COVID Boosters as 10-Year U.S. Treasury Yield Continues Climb

The 10-year U.S. Treasury continued its climb hitting a high not seen since May. The 10-year U.S. Treasury yield hit 1.67% early in the day, a level not seen since mid-May, before closing up 2 bps to 1.66%. The strong earnings season has lifted investor sentiment on the economic outlook helping to lift long-term yields across a steepening curve in recent days. It was also announced by the U.S. Food and Drug Administration that booster shots for Moderna and Johnson & Johnson have been cleared.

Mortgage applications unexpectedly dropped 6.3% for the week ending on October 15. Analysts were expecting an increase of 0.2% for the week. Since early September, the rising of long-term rates has pushed 30-year fixed-rate mortgage rates up 20 bps to their highest levels since April. Refinancing contracts, which are more sensitive to weekly rate increases, have fallen for four consecutive weeks.

Fed Beige Book shows slowing economic activity over the past month as prices rise. The Fed cited supply disruptions and rising COVID cases behind the stunted economic activity seen across their 12 Districts. The report also commented that most of the 12 Districts reported “significantly elevated prices,” with businesses indicating a “greater ability to pass along costs.” The Fed is expected to start tapering its $120 billion bond-buying program as early as next month, even though recent labor market and economic data indicate stalling growth.