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why the interest rate goes up?
October 12th, 2011 9:14 AM

Only a few days ago, the "news" said that the interest
rate is record low. And now it's 0.25% to 0.375% higher
for most of the fixed program.

If you asked a lot of other loan agents, they would
tell you that the rates indeed went up. But not all of
them know why.

Ok. The rate went up because of the Fed "twist operation"
and ECB. The rate rate went up because of ECB.

ECB announced dollar-based funding that would ensure
European banks retained sufficient liquidity to operate
through the end of the year, that the reaction was positive
for stocks and negative for bonds. It also seemed like the
collective "panic" was able to breathe some sort of sigh of
relief. That's why the interest rates were higher.

The question is: will the rate go lower? My answer is yes.
First, the fundamental did not change, did not change for
better. Second, Fed will continue to purchase long term
bonds, so the rates will stay low.

But as always, the rate can go up 0.5% in a single day,
it might take 3 to 6 months go back to the previous low
level.

Let's wait and see. Have a good day.


Posted in:General
Posted by Eric Fang on October 12th, 2011 9:14 AMPost a Comment

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