23 December 2010

Here’s the latest example: last week many banks raised their mortgage rates because their borrowing cost was up in the bond market. And it’s exactly the bond market where banks can get money to finance consumers’ loans. Some investors also sell North American bonds and rotate money into the stock markets. Of course, it made the banks (and other borrowers) pay higher interest rates on bonds in order to get investors.
It seems we’ll see not a very smooth economic recovery next year. And it means there shouldn’t be any sharp rate hikes in the nearest future.