Bond prices posted a significant decline on Monday sending long term interest rates higher, while mortgage rate averages remained stable.

Events overseas dominated the action in the Treasury bond market as the outlook for the Japanese and Russian economies began to look up. Japan's Prime Minister resigned, leading many analysts to believe that the chances of meaningful economic reforms in Japan are now much greater. The IMF approved a $14.8 billion bailout for Russia, forestalling a possible default. These events drove the price of the benchmark 30 year Treasury down 1 point, pushing the yield up to 5.69%.

Mortgage rates on Monday stayed put, with the 30 year fixed rate average at 6.82% and the 15 year fixed rate at 6.51%, and the 1 year ARM rate at 5.67%. If the spike in bond yields holds through the week, banks may be under pressure to raise mortgage rates. The Consumer Price Index and June retail sales are scheduled to be announced today.

Published: July 14, 1998

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