TLDR:
- US mortgage rates hit 7.45% as bond yields jump, raising fresh concerns about inflation costs.
- Brent crude above $105 and record diesel prices add pressure as markets reassess the Fed’s rate path.
- The 10Y Treasury yield gained 30 basis points in two days, its sharpest rise since April 9, 2025.
- Markets now price 100 basis points of rate hikes by next summer as inflation expectations move higher.
US 30-year mortgage rates have climbed to 7.45% as Treasury yields surge and markets reassess Fed policy.
The Kobeissi Letter reported the mortgage rate jumped 17 basis points. That puts rates 150 basis points above levels seen six months ago.
The current rate is the highest since November 2023, when inflation remained elevated. It also marks a sharp reversal from the lower-rate environment that followed pandemic stimulus.
Why US Mortgage Rates Are Rising
The latest move follows a sharp repricing across the bond market. The 10-year Treasury yield has gained 30 basis points over two days. Yesterday marked its largest daily increase since April 9, 2025.
According to The Kobeissi Letter on X, inflation is driving much of the bond market pressure. Brent crude has moved above $105 per barrel, while diesel prices have reached record levels.
Global diesel consumption also rises by about 2 million barrels per day during peak demand season. Truckers are now paying more than 100% more for fuel than nine months ago.
US consumers expect inflation to reach about 4.6% over the next year. The Kobeissi Letter said that ranks among the three highest readings recorded during the past 12 months.
Higher inflation expectations can pressure bond yields as investors demand more return. Rising Treasury yields can then feed into borrowing costs across the economy.
US Mortgage Rates Reflect Shifting Federal Reserve Expectations
The bond market has also shifted after expectations around Federal Reserve policy changed. Eight days ago, the Fed delivered its first unanimous decision since May 2025.
The central bank raised rates and stated that it would deliver price stability. The Kobeissi Letter described the decision as a stronger signal on its 2% inflation target.
Markets are now pricing 100 basis points of rate hikes by next summer. That expectation has pushed interest rates higher across multiple parts of the financial system.
The Treasury also attempted to intervene, but The Kobeissi Letter said the move produced only a limited market reaction. The bond market is therefore reflecting stronger expectations for future rates.
The report also linked the pressure to US deficit spending and rising debt issuance. Its argument rests on supply and demand in the Treasury market.
More debt issuance can increase the supply of bonds available to investors. If demand fails to absorb that supply, bond prices can fall while yields rise.
For crypto traders and investors, higher rates can tighten financial conditions across risk assets. The mortgage market shows how quickly higher yields can reach households and credit markets.
The report expects inflation above 3% to persist into mid-2027. It also says the dollar has lost 40% of its purchasing power over ten years.
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