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An End to Rising Rates?

Written by Nickel - Leave a Comment

Thus far, 2006 has been a great year for stocks. With five straight days of gains, the Dow has topped 11,000 for the first time in four and a half years. All of this suggests that the market, or at least the market makers, believe that the Fed is done raising rates. So what does this mean for you? Well, the news might not be all good…

According to MSN Money’s Jim Jubak, an end to increasing interest rates will likely result in:

1. A weaker dollar and higher prices at the store.
2. Higher gasoline prices.
3. Higher mortgage rates.
4. A continued rally in gold stocks and new life for financial stocks.
5. And an end-of-the-year surprise: interest-rate cuts from the Fed.

I don’t know about you, but I’ve already gotten used to a weak dollar and high gas prices. While I know these things could always get worse, perhaps the scariest thing on this list (at least to me) is what will happen in this country when mortgage rates start to climb. It seems that there is a ‘perfect storm’ of sorts looming on the horizon… Rising mortgage rates right around the same time that an awful lot of ARMs starting to float. It could get ugly.

[Source: MSN/Money]

Published on January 10th, 2006 - Leave a Comment
Filed under: Economy

About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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