Monthly Treasury Average Index - MTA Index
Categories: Bonds
The Monthly Treasury Average Index, or the MTA Index, takes the annual moving average of one-year, constant maturity U.S. Treasury bond interest (CMT interest).
Since the MTA is derived from one-year moving averages, it’s moving in slo0o0owWwWw motion, lagging behind what’s happening in real-time. Even though it’s not sensitive to new trends, it's calculated using the one-year yield of the latest batch of U.S. Treasury bonds, so it’s always reflecting the newest yields rather than yields of older, still-maturing bonds.
The lagging MTA is used by banks to set the interest rate on some adjustable-rate mortgages (ARMs). Since ARMs are adjusting, they have to be adjusting to something, whether that’s following the MTA or another index.