During the past month or so, interest rates, oil prices and even gold prices have been rising. The stock market has been moving upward steadily as well, though stocks have been moving up for many years now and accelerating for the past year. With the Federal Reserve Board raising short-term rates and starting to sell assets, along with the many hurricanes we have witnessed, these higher prices are not unexpected.
In reality, it is amazing that interest rates and oil prices have stayed so low with all of these factors involved. We all would like to know where things are headed in the future–will they continue up or settle back down? The bottom line is, we can’t predict where prices and rates will go without knowing where the economy is headed. We do know the economy has been heading in the right direction since a pause which took place in the first quarter of the year.
However, we won’t have a great idea of where the economy is heading now because of the interruptions of major storms. We could have a very poor quarter or two and then have a major growth spurt because of the tremendous rebuilding that will be going on. Markets always move on psychology because we can’t predict the future, but the markets are always looking for indicators of the future. Right now our indicators are likely to be even worse predictors of the future than normal. Thus, in answer to the question — where is the beef? It may be more hidden than usual.
The Weekly Market Update
Rates were up in the past week, with rates on home loans starting to react more closely to the movement of Treasuries. For the week ending October 12, Freddie Mac announced that 30-year fixed rates rose to 3.91% from 3.85% the week before. The average for 15-year loans rose as well, to 3.21%. The average for five-year adjustables moved down to 3.16%, bucking the trend. A year ago, 30-year fixed rates averaged 3.47%.
Attributed to Sean Becketti, chief economist, Freddie Mac -- "The rate on 30-year fixed loans increased for a second consecutive week, jumping 6 basis points to 3.91 percent. The 10-year Treasury yield also rose, climbing 4 basis points this week."
Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.