Interest Rate Update
Kiplinger’s Letter said “Home sales and refinancing will sag as a result of interest rates. But not by much. Slightly higher home rates will be offset by bargain prices. And the tax credit of $8,000 for first-time homebuyers will continue to charge up demand. The Federal Reserve will let interest rates rise as long as mortgage rates remain in the 5%-5.25% range, as we expect. That’s pretty low by historical standards. And if the Fed bought more Treasuries to lower rates, it would spark inflation fears.”
I agree with this. Today interest rates rose due to the job losses being better than expected. However, the unemployment rate was higher than the expected 9.2% at 9.4%. Hopefully we see a selloff in stocks with investors taking profits and going back into bonds. Right now the only buyer and seller of bonds is the Fed. They can only do so much.