by Calculated Risk on 2/09/2009 11:20:00 AM

From CNBC: Mortgage Rates Likely Headed to 4.5%: Pimco's Gross

"I think at some point we're going to see a 4.5 percent mortgage rate and the 10-year Treasury rate capped at some level," he said. "When the Fed comes in to buy Treasurys that will be a big day."

CNBC has a video of the interview with Gross.

Click on graph for larger image in new window.

The 10-year yield is at 3.04% today, well above the record low of 2.07% set on Dec 18th.

This graph shows the 10 year yield since 1962. The smaller graph shows the ten year yield since the start of 2008. In the bigger scheme, this has been a fairly small rebound in yield.

To move the 30 year mortgage rate to 4.5%, the Fed would probably have to cap the Ten Year yield near 3.0%.