Dec 16. US interest rates surging

–The high yield in the ten year note in 2007 was around 5.30%.  As the financial crisis developed over the next year or so, tens went down to 2.05% in late 2008.   Halfway back is 3.67%…and we are now 3.54%.  Of course, we have been as high as 4% this year, and just 2 months ago 2.37%.  But around halfway back seems like it ought to cap this particular move.

–Headline on Drudge Report: ” Al Qaeda Plans Christmas Attacks in US, Europe.”  Rioting is continuing in Greece, students in the UK have protested, and now Italy is seeing social unrest.  As US rates rise the dollar is benefitting, but part of the bid is certainly due to weakness of the euro, which is likely to continue.  At these treasury yields, even though it feels like there might be a bit more to go, money will begin to flow back in.  Additionally, higher mortgage rates are going to absolutely KILL the housing market going forward.

Posted on December 15, 2010 at 4:14 pm by alexmanzara · Permalink
In: Eurodollar Options

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