Key Levels for Today's Closes after a Yo-Yo Week
NEW YORK (TheStreet) -- When you are trading the several markets that make up the U.S. Capital Markets you need to have an analysis methodology that consistently provides strategies that work most of the time to maximize profits. There are relationships between U.S. Treasuries, gold and crude oil, currencies and the major equity averages that can help increase profits. To be disciplined you should look at the same type of monthly, weekly and daily charts for all markets. If you are following my proprietary analytics you know that value levels, pivots and risky levels are calculated by the same set of mathematics for all markets, including individual stocks.
The U.S. Treasury 10-Year Yield: After the yield on the 10-Year note declined to a record low yield at 1.439% last Friday, June 1, this yield rose to 1.685% intraday Thursday. The weekly chart shows that the decline in yields is overdone, but I do not have a signal that this yield is about to rise significantly any time soon. My semiannual value level is 1.903% with my quarterly risky level at 1.407%.
The Fed's mission in maintaining record low U.S. Treasury yields is to help the mortgage market. The Freddie Mac 30-Year Fixed Rate Mortgage declined to a record low of 3.67% this week, 202 basis points above the yield of the 10-Year note. This spread is still too wide. FHA-insured mortgages are securitized into Ginnie Mae Pass Thru securities, and their Streamline Refinancing Program offers a mortgage rate that's even higher at 4%. Mortgage rates remain too high to provide the necessary stimulus to the housing market. As I have been suggesting, the housing market needs help from the Federal Reserve to bring down mortgage rates to stimulate demand for homes and mortgage refinancings. The 30-Year fixed-rate mortgage should be no more than 100 basis points above the yield on the 10-Year U.S. Treasury yield, which would set a 2.57% mortgage rate this morning.