Thursday, July 19, 2007

Profit From Higher Long-Term Rates

Jeremy Siegal's latest column talks about the rising interest rate environment and its affects on the global economy and markets.

What follows are a few excerpts:

"Since the middle of March, the world’s bond markets have witnessed a sharp increase in long-term interest rates.

The ten-year U.S. treasury bond has risen from 4.50% to 5.15% and reached as high as 5.30% on June 12. Rates in Europe have increased even more than the U.S., as the ten-year German bond has risen from 3.90% to 4.70% and the U.K. bond from 4.75% to 5.55%."

"I believe the real estate slowdown will not significantly damage the rest of our economy. The upward revision in growth has already brought about adjustments in the capital markets. These adjustments will actually help the Fed control the inflationary pressures and make it less likely, in my judgment, that it will raise rates in the future."

Scott Dauenhauer, CFP, MSFP, AIF