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Tuesday, July 7, 2009

Interest Rate Chonicles. Treasury Auction Watch.

So you love these low interest rates? Great news, then! The economy continues to suffer and last week's data showed the U.S. economy lost almost half a million jobs in June, as a result, it is widely expected that the Federal Reserve will keep interest rates near zero for some time. I hope you're happy.

Interest rates on short-term Treasury bills fell in Monday's auction (july 7th,2009). The rate on six-month bills dropped to the lowest level since late December, while three-month bills also dipped. Rates had been climbing due to increased confidence in the economy.

There also will be a $19 billion 10-year bond sale on Wednesday and an $11 billion 30-year auction on Thursday. As discussed in our June 18th, 2009 blog, mortgage rates closely follow the 10-year bond rates. Want to predict the future? Impress your friends? If the 10-year demand is low, rates will move up and mortgage rates will likely follow and vice versa. The chart that demonstrates this trend is worth a second mention and can be found at http://www.hsh.com/images/forgetfed.gif.


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