The Sunday Morning Interest Rate Roundup
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Good Morning. Freddie Mac had 30-year fixed rates averaging 6.69% last week, down slightly from the week before. Without further ado, our random roundup on rates:
Conrad De Aenlle writes in the New York Times: ‘No change in key interest rates is foreseen when the Fed meets on Thursday. The federal funds rate stands at 5.25%.’ The real news will be the Fed’s statement, and what hints it gives about whether the Fed is leaning toward higher rates or lower rates.
We like Lou Barnes at Inman News for several reasons, one being his willingness to make predictions: ‘Everyone assumes the 10-year T-note will make a run through 5.25%, and mortgages will climb to 7%, but I don’t think we will stay that high unless there is worse news on inflation or the global economy runs away from the central banks.’
Caroline Baum at Bloomberg reasons that the recent rise in interest rates is not entirely a bad thing: For an individual presented with a 6.75% 30-year rate compared with 6.125% six months ago, the choice may be unpalatable. For the economy as a whole, however, it’s a ‘positive development,’’ says Jim Glassman, senior U.S. economist at JPMorgan Chase & Co. ‘It says the economy is getting better, driving the natural level of rates higher.’’
We’ll continue to monitor fallout from the Bear Stearns hedge fund mess. The New York Times’ Gretchen Morgenson (sorry, no link, she’s behind the pay wall) is predicting more trouble: ‘Do the math: Bear Stearns is paying $3.2 billion to shore up a fund that once had $10 billion in value, according to one investor. That’s 32 cents on the dollar. ... Values of securities higher up in the capital structure of these asset pools will likely take a hit. The bad performance is bleeding upward.’
Your thoughts? E-mail story tips, and links to your favorite Fed watchers, to lalandblog@yahoo.com.
Photo: Fed Chairman Ben Bernanke, by Reuters