While rising treasury yields may be music to the ears of savers who have been crushed by low interest rates over the past 7 years, they're a bit of downer for the overwhelming majority of Americans that have been funding their lavish lifestyles with cheap debt. Yes, sadly the days of upgrading to the $65,000 luxury car despite a $40,000 annual salary, because you can "afford it" so long as you can cover the low monthly payments courtesy of 7-year terms and low interest rates, may finally be coming to an end.
But auto OEM's aren't the only ones about to get crushed by the "normalization" of interest rate policies in the U.S. As the Wall Street Journal points out, according to the Mortgage Bankers Association, mortgage refinancings are set to drop 46% in 2017. And with many American's funding their daily expenses with "cash-out" mortgage refi's, pretty much everyone selling goods to consumers, which happens to represent about two-thirds of the economy, has reason for concern.
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Yay, Trump. Just wait a year or so when you can't get credit or buy anything on credit because interest rate are shy high. Remember the Reagan years?
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Federal funds, effective rate 8.10%
Prime rate charged by banks 9.93
The Reagan years were great if interest goes up the price goes down.
ReplyDeleteThe rates are decided by the international bankers.
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5:30 You think the price of a new truck is going down if rates go up? Refrigerators, washer/dryers, ranges?
ReplyDeleteThe Feds have been manipulating the markets in favor of Democrats and since Trump won the election, the rate hikes, etc., will be blamed on Republicans. But we know it takes at least a couple years for changes to take real effect. Anything happening now the liberal Democrats are to blame. Just as the Dems took credit for the turn-around six months after Obama took office, but it was Bush's tax credits that caused improvement in the outlook. Obama's policies worsened the economy and, of course, they kept blaming Bush.
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ReplyDeleteYou stated half of the truth.
They say what goes up must come down, well when it hits the absolute bottom there is only direction to go and it's going.
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