What’s In Store For Interest Rates?

It’s anyone’s guess.  This morning on CNBC they were talking about traders losing money and then Joe Kernen said “aren’t we losing money then too?”  He is exactly right the government is losing money on their investment (tax payer monies).  The articles below talk about how higher rates will affect the housing market and that the Fed needs to step up their purchases of mortgage-backed securities.  One reason they may not get more aggressive right now is that they don’t want traders buying and selling based on what the Fed is doing.  It sounds as though the Fed may just continue to be steady with their buying and then come June 23rd and 24th at the next Fed meeting we might hear more.

“Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won’t rush to react — even though some investors see danger in the government’s rising cost of borrowing.”  http://online.wsj.com/article/SB124355477324764533.html#mod=rss_whats_news_us 

“The spike in rates has the potential to derail a lot of things,” said Mahesh Swaminathan, a mortgage strategist at Credit Suisse Group in New York. Higher rates make it less likely that homeowners will be able to lower their monthly payments by refinancing, which could put a crimp on consumer spending. They could also mean lower earnings for banks, which have profited from increased refinancing. http://online.wsj.com/article/SB124352408197662869.html#mod=rss_economy