First of all, I wish you a very merry Christmas! I hope that you are able so spend lots of time with your families over the next few weeks, that you are safe, and that your stocking is full. On Wednesday the Feds started to slim down their purchases of MBS and longer-term Treasuries to allow interest rates to come up. Like a physician slimming down your Lortab dosage several weeks after a hip replacement, it is painful, but necessary. And soon you discover that you might not need as much as you had been taking in the first place because you have recovered more than you had thought. So right on queue today, the GDP numbers come out showing a 4.1% growth rate across the country. This is a greater increase than we’ve seen since the end of 2011. A large portion of that growth came from a 2% increase in Consumer Spending—so your stocking should be full. You can see from the chart here that interest rates are most assuredly on the rise as prices fall following a very linear pattern; the big decrease two days ago and subsequent whip-saw is post-Fed reaction.
Believe it or not, 30 interest rates are still in the 4.0-4.5% range for now.
