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Bond Rates Going Up

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Fernando

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Nov 7, 2016
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Certified Residential Appraiser
State
California
After election, this week bond rates went up. Media gave many reasons but miss an important one.
Our bonds are purchased mostly by foreigners. If I was China, I would stop buying US bonds just to show how important China is, in financing our debt. Thus we need to be aware how our financial interests can be influenced by our trading partners. America is great but we're not as strong and independent as before.

Rates going up will mean mortgage rates will go up and this may kill our real estate business. Anticipate the downturns in appraisal work.

The consensus is, next month, the FED will raise rates. Wall Street is expecting rates to go up. I don't understand why the pressure in expecting the FED to increase rates. If bond rates keep going up, FED has now choice but to increase rates.
 
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Randolph Kinney

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Retired Appraiser
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North Carolina
Interest rates are going up on expectations. China has been selling its holdings of U.S. Treasury paper for more than a year. At this juncture, the FED is behind the curve, rates are rising without FED action.

The market is signaling its reaction to the collapse of trade agreements.

The breakdown of central bank contol is upon us.
 

Fernando

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As I remember from Economics from many years ago, the rates are affected by purchasers of our debt. Back in the 1980s, Japan were the major buyers. Afterwards, it was China. We're a nation of spenders not savers. I never understood that until I see how our tax system works and how low rates are on saving accounts. I can't see how saving 3% of your income amount to anything but that's another story. The point is we need foreign saver countries to help support our national debt.

Also FEDs decision to change prime rate is not as important as the "printing of money" into the economy in affecting rates. The contracting or expansion of money affects rates more than a meeting for a few days. I never heard of trade agreements affecting rates.
 

Randolph Kinney

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I never heard of trade agreements affecting rates.

Trade reflects who is buying your debt and the interest rates they will accept. The U.S. trade deficit reflects shipping dollars and jobs overseas and is mirrored by spending deficits.

In short, there is a direct relationship with trade, deficits, interest rates and foreign exchange rates.
 

Randolph Kinney

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Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
The far-reaching trade agreement with 11 other Pacific Rim nations that President Obama hoped to leave as a major legacy, but which Mr. Trump called “a terrible deal,” is dead.

Another broad trade deal still being negotiated, the Transatlantic Trade and Investment Partnership between Europe and the United States, is a likely casualty of the Trump election and a global backlash against trade.

http://www.nytimes.com/2016/11/12/b...trade-tpp-trans-pacific-partnership.html?_r=0

Chances of a Bank of Canada interest rate cut just increased with anti-trade candidate Donald Trump’s election victory.

The Republican candidate, who defeated Democrat Hillary Clinton to become the 45th U.S. president, has pitched a brand of protectionism that includes reopening the North American Free Trade Agreement, a move that could have a significant impact on Canadian exports.

The Canadian currency declined as much as 1.8 percent to C$1.3525 against the U.S. dollar, before moving to C$1.3422 at 8:27 a.m. in London.

http://calgaryherald.com/business/t...ank-of-canada-cut-more-likely?__lsa=7759-c972

Trump has promised a big cut in the US corporation tax rate and other measures to make it less financially attractive for companies to hoard money offshore. And Trump’s trade policies threaten disruption, even if his remarks after he was elected were clearly trying to be more conciliatory and allay some of the fears of trade wars raised during the campaign.

http://www.irishtimes.com/business/...trump-delivers-on-economic-policies-1.2863096

Trade, exchange rates, budget balances and interest rates

20161112_int104.png



http://www.economist.com/news/econo...ange-rates-budget-balances-and-interest-rates
 

Big ole Boy

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General Public
State
Tennessee
The incestuous relationship between the establishment and globalism is being played out as a "hissy-fit" in the 10 year treasury post Trump elect. If the auctions continue to be poor ...... they will either have to impeach Trump or force him to resign and make Pence a Patsy.

Berlicossi in Italy lasted only 2 years in Italy because the elites dried up the bond market.

Stock prices are gonna get puny if this keeps up.
 

Elliott

Elite Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Oregon
The market built-in the December Fed rate hike of 1/4%. Didn't you hear, GDP is growing at 3% (pre-election phoniness) and the unemployment rate is under 5%, wages are surging. Nothing to see here, move on.
 

Evincere

Elite Member
Joined
Dec 30, 2002
Professional Status
Certified Residential Appraiser
State
Florida
After election, this week bond rates went up. Media gave many reasons but miss an important one.
Our bonds are purchased mostly by foreigners. If I was China, I would stop buying US bonds just to show how important China is, in financing our debt. Thus we need to be aware how our financial interests can be influenced by our trading partners. America is great but we're not as strong and independent as before.
.
But, but...what would China do with all that toxic surplus drywall, computer monitors, mechanics, us missle component parts, and all the other shet they sell to us? I'm old fashioned. Me thinks that Americans now have more TVs than they can actually use and that we need to start making products in this country that we can sell to each other.
 
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