2007-06-14

US Bonds

Are not doing very well at the moment.

When the interest rate rises on US Government bonds, it essentially means that people are pulling their money out of the Bond market. The bond market responds by setting the interest rates higher. It has gone from 4.96% to 5.3% in a matter of days. It may not sound like much, but such a rise over a few days is troublesome.

To me it indicates a lack of confidence in the US Dollar. It will cause mortgage rates to rise in the US and restrict borrowing.



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