Tuesday, February 23, 2010

Consumer Confidence Stops Rate Surge

Once again, as the 10-year rates try to break above the current 3.80% resistance, a piece of negative news rattles the markets. Consumer Confidence, as reported by The Conference Board, plunged to 46.0 this month, down 10 points from a revised January reading of 55.9. The 1-year Treasury rate fell to 3.2 after battling to get above 3.8 the past few days.

As the above chart shows, this setback may only be temporary as rates have been showing a strong persistance to the upside. While we don't expect rates to blast through the 4.0% level without some strong news, like China bailing out of Treasuries or something like that (WHOOPS, That is already happening), we do expect that it is only a matter of time that it will happen.

We expect that this upward trend in interest rates will continue despite government and Federal Reserve efforts to hold rates low.

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