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.
Comments are closed.