Archive for the ‘Mortgage Rates’ Category
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Now the Bonds are Giving Us Hints That Higher Rates are Ahead
The 30 year bond futures have broken below the lows of the past few weeks and this may be the start of a bigger decline ahead. As bond futures fall, rates increase. Watch the next rally in both the 30 year bonds USZ09 and the Ten Year Noteas TYZ09. If the next rally in unsable to move above the high of the previous 3 days, then we may be in store for a more serious decline later this month. Active traders should be on alert for potential shorts in these markets.
A severe correction in the equity market may prevent a market fall in the bonds or notes, but so far there has been nothing but an incredible rally in the equity markets. Combine this with higher commodity prices to instill a fear of inflation and you get a depressed bond market in the futures markets. What we do in the futures markets in the bonds and notes the next few days may set up a trend that will last for several weeks.
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Bond Futures Suggest No Fear of Inflation
The 30 year bond futures set a new high for the past 4 months. This means rates are on the decline and this would not be the case, if there was a serious concern over inflation among the investment community. While there is certainly talk about the coming inflation due to the dumping of money into our economy, the bonds are not showing any signs that the inflation demon is on the horizon.
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This is why we have not yet begun to face our financial crisis.
This is why we have not yet begun to face our financial crisis. Here are the next two huge waves of home mortgage refinances. Our long term interest rates must stay low to allow these mortgages to reset at a rate that the debtors can service. That means that the rate on the 10 year Treasuries must stay in the 3% range until 2012 – nearly 3 years! Read the rest of this entry »
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