Yields on Treasury securities like the 10-year note are used to calculate interest rates on student loans, mortgage rates, credit cards, and many other kinds of debt. As the 10-year yield has risen in the last six months, so have mortgage rates. In early May, the average mortgage rate was around 3.35 percent. This week it was 4.48 percent, according the government mortgage agency Freddie Mac.
“We are starting to take the medication away from the bond market, but it’s important to note that yields are still at historically low levels,” said Dan Veru, chief investment officer of Palisade Capital Management, which manages $4.5 billion in assets.
Investors cheered the latest signal that the U.S. economy is improving. The Labor Department said the number of Americans who filed for unemployment benefits fell 42,000 last week to 338,000. The drop was far bigger than economists were expecting and an indication that fewer people were losing their jobs.
It was another slow day for Wall Street, with most investors on vacation for Christmas and only three trading days left in 2013. Approximately 1.96 billion shares traded hands on the New York Stock Exchange on Thursday, well below the daily average of 3.3 billion shares.
In corporate news:
T-Mobile rose 74 cents, or 2.3 percent, to $32.93 after The New York Times and other news outlets reported that the Sprint division of Japan’s Softbank was looking to buy the wireless carrier.
Twitter rose $3.35, or 5 percent, to $72.31. The stock is up 22 percent this week alone and 76 percent so far this month. Investors continue to bid up Twitter’s shares on optimism the social media company can increase profits from mobile advertising.