The yield on the 10-year Treasury has recently soared toward its highest level since 2023, injecting nervousness into the U.S. stock market that's knocked indexes from their records.

As mentioned, mortgage rates haven't fallen in line with the Fed's rate cuts because they depend on factors beyond the agency's benchmark rate, such as the economy and 10-year Treasury bond yields. For example, when the 10-year treasury rate goes up, mortgage rates tend to follow, and vice-versa.

There’s uncertainty about expected policy changes favored by the Trump administration - which may be inflationary to a degree. We anticipate that Fed will leave rates unchanged on Jan 29.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

How embarrassing would it be for the Federal Reserve to raise rates this year? Could it admit that its aggressive rate reductions last year, including a cut as recently as last month, were a mistake,