Its been how long now since the news of Greece defaulting on its obligations hit the news? It seems like its been years, but that may not be the case. Whatever the amount of time has been the news of Greece and its financial woes has really helped mortgage bonds perform well and keep rates down. As Greece goes in for another round of austarity plans and another round of approval within the EU another key event is taking place that may have an impact on rates...just as Greece has had an impact.
Believe it or not the Quantatative Easing 2 is drawing to a close this week. Many have speculated that interest rates would go up as the Fed exists the bond purchase plan they have been doing for over a year now. So far the markets havent made their move. Even though the June 30th date is this week it seems Greece is still carying more weitght than the QE2 ending. I dont know what to draw from this, but I would guess that Greece stability, QE2 ending, and the CPI figures from last week all spell out a future with interest rates going higher.
Oh..this sounds so familiar...how many years have I said rates will be going higher? I feel like the kid who has cried wolf one (more like 50) too many times. I guess I have to qualify what I mean by higher rates and what time frame I would expect. I do think rates will climb higher...I dont expect them to jump higher as the economic outlook isnt exactly red hot, but inflation does seem to be present at the producer/manufacturer level and that will eventually move into the price of goods. Also...like it or not the Federal Reserve has been keeping rates lower than they may have otherwise been with their bond purchase plan.
So don't become too complacent on rates being in the 4% range as it may not last indefinately...though it could last through the year.
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