Thursday, March 26, 2009

Interest Rates




My husband, Peter is an investment advisor, he sent this out to his clientele and I thought it pertains to housing as he sees us in "The Last Great re-fi"




Here’s a chart that’s disconcerting relative to future inflation as measured by the CPI index. Interest rates will correlate to the CPI, so as gov’t spending goes, so goes CPI and so goes rates. However, this is not an immediate effect, the CPI is not going up tomorrow, this is something that is longer term out, but at this point looks to certainly be in the cards, unless new information down the road changes this. Just as we saw and alerted you to the “last great bond rally” by via the inverted yield curve that started in late 2006-early 2007 and has always preceded every recession, we now see very high odds of future inflation from unintended consequences of Government action and that is something that is also now present in a very steep yield curve that has preceded every recovery and again this is out 1-3 years and we now suggest we are seeing “the last great refi” of perhaps your lifetime, this may persist for the remainder of the year or so but soon thereafter inflation will push rates up. Lock up long term rates while they are on sale!!


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