Excerpt from: Flagstaff Mortgages
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| September 20, 2007 | | The bond market does not like the sinking Dollar. | We have seen a .50% increase to home mortgage loan interest rates today from Monday's low, the day before the Fed rate drop. As we predicted the rally in lower 30 year fixed rates has stopped. Mortgage bonds are trading lower again this morning. The euphoria has worn off from Tuesday's rally following the interest rate cut. Traders have now assessed the long-term negative effects of the sinking dollar and have begun selling into the market. The US Dollar has been falling against foreign currencies. This is inflationary because it takes more dollars to buy foreign imports, which is effectively the same thing as a price increase. Bond prices have drifted lower throughout the day, pressuring home loan rates higher. | |
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