Interest rates continue to move upwards

Interest rates continue to move upwards.The following are excerpts from the newsletter on interest rates published by HSH Associates :

“ As goes investors’ perception of the economic climate, so go interest rates. Although mortgage rates were relatively stable for the week as a whole, upward pressure has been building all week long, and it’s a good bet that this upward pressure will be expressed in higher mortgage rates next week.

While there was an overall warmer tenor to the collective data which was revealed this week, it didn’t seem all that strong to us. However, we seem to be in on of those periods where poor news is rationalized away and good news is lent more credence than perhaps it deserves.

Whatever the reason, mortgage rates are or shortly will be on the rise.

Despite items which should have tempered enthusiasm about the prospects for the economy, the focus remained squarely on the positive factors, those which would tend to confirm expectations of a Federal Reserve preparing to end QE in just a few short weeks time. That in turn pushed underlying influential interest rates, such as the yield on the 10-year Treasury, back to two-year highs. Oddly, stock investors seem of the opinion that the stronger economy isn’t all that good of a thing, since they also by and large sold their holdings this week, too. One would think that, if the economy is strong enough as to warrant a Fed pullback — that if prospects are brightening — that there would be more value in holding stocks. Time was, in an un-Fed-influenced market, that a selloff in stocks would be a positive for bonds, pushing yields lower, but not so much at the moment.

Even with the selloff this week in stocks and bonds, we could see more of the same next week, when key reports come in the form of the minutes from the Fed’s July 31 meeting, new and existing home sales, the weekly update on unemployment claims and a couple more items. Mortgage rates will be moving back upward, probably by 10 basis points or so. We may even approach new 2013 records.”

The following are interest rate quotes from Al Hermann of American California Financial: