Interest Rate OUtlook

 

September 27, 2000

        

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"OOPS!"      

30  Year Treasury Bond
The government announced that miscalculations in the Consumer Price Index have been understating inflation at the consumer level for the last year now. Presumably, they will released the revised inflation figures any day.  Most likely the change will not be much, adding a tenth or two to each month's CPI.  However, if aggregate inflation shows to be three percent a year or more, this could cause a reaction in the bond market.  Since the economy appears to be slowing due to previous actions by the Federal Reserve Board, any market reaction will probably be muted.  In addition, corporate earnings for the third quarter are looking fairly dismal at several companies and this usually helps the bond market.  Look for rates to hold steady until the first of the year when they will probably also hold steady, but may begin a slow decline.      
09-27 

(5.91%)
09-06 

(5.70%)
08-22 

(5.70%)
08-02 

(5.78%)
07-20 

(5.81%)
06-30 

(5.88%)
06-14 

(5.91%)
05-31 

(6.01%)
05-18 

(6.15%)
05-04 

(6.18%)
04-14 

(5.83%)
03-17 

(6.08%)
03-10 

(6.17%)
03-03 

(6.15%)
02-25 

(6.13%)
02-18 

(6.15%)
02-11 

(6.30%)
02-03 

(6.16%)
01-26 

(6.56%)
01-21 

(6.73%)
01-07 

(6.57%)
12-31 

(6.46%)
12-24 

(6.46%)
12-03 

(6.30%)
11-26 

(6.23%)
11-18 

(6.16%)
11-11 

(6.03%)
11-04 

 

  

(6.04%)

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Short-term Outlook

      

Rates do change slightly from day to day, but nothing momentous.  If you are buying a home now and willing to take a little risk, you might consider not locking in your interest rate.  This is because the shorter your lock-in term, the cheaper the cost for the same rate.  The difference between locking for 45 days and 12 days is often as much as half a point.  The problem is that even in a "steady" market, there are often a few days of volatility mixed in, and that may occur at the time you NEED to lock your rate in order to close.

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  .Mo