Fears of global inflation have nudged mortgage bonds higher this week. Even with interest rates at historical lows, the era of negative interest rates appears to be over, at least for now. All of the major 10-year Treasury Bonds (Germany, Japan, UK, and US) are all yielding positive interest rates.
Gross Domestic Product (GDP) led the economic news this week. The government reported that the 3rd quarter GDP was much stronger than expected. As with many government reports, the real valuable information is found within the report; it’s not so much about the top-line growth rate. Delving into the report’s details reveals that consumer spending slowed and corporate investment on equipment fell for the 4th straight quarter.
Our experts envision interest rates going a bit higher, but the markets seem to be getting comfortable with a 10-year US Treasury Bond trading between 1.75% to 2.00%. At the moment, we are neutral on whether to float or lock interest rates at these levels.