The cost to borrow money is on the rise, The New York Times reports, and that is bad news for homebuyers and other prospective borrowers.
Rising rates helped cause a stock market sell-off on Wednesday, prompting President Donald Trump to say the Federal Reserve has “gone crazy.”
But others say it’s good news for the long-term direction of the economy.
In effect, the multi-trillion dollar global bond market is signaling a little greater confidence than it did just a few weeks ago that the nine-year expansion in the United States may have room to keep going for years to come, and without inflation taking off.
The yield on 10-year United States Treasury bonds reached a seven-year high this week of 3.25% (it receded some Wednesday as stocks dropped), up from 2.82% in August. The 10-year rate was below 1.4% as recently as July 2016.
But beyond those headline numbers, the details of how the prices of different types of securities have moved relative to one another tell a story that is decidedly optimistic.
The rise in rates means the world’s most savvy investors are betting that the U.S. economy will keep growing at a healthy clip, without inflation emerging, but that the Fed will have to keep raising rates well above current levels in order to prevent that inflation.
Read the full story.
