Earlier, I noted that the Federal Reserve’s decision to stop purchasing mortgage-backed securities (MBS) should cause an increase in mortgage rates. But that won’t be the only thing driving up long-term rates: the Treasury’s trouble going forward in selling debt will also contribute to higher mortgage rates, according to a Morgan Stanley economist. Here’s what he says, via Bloomberg:

Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said.

Full story is available on The Atlantic