FormerXBC Inc XEBEQ

RE:Basic economics

[Newtrader1982]

Actually yes people did believe they would stay at 1% forever. I have even seen several people suggesting that interest rates would go negative like in Japan. I guess they think they can't raise the rates without crashing the economy and housing market so they would avoid it by using negative rates. I have been trying to purchase a home lately and what is happening in the housing market is idiotic the owners wait for a presentation day and sit and look at the 20 offers they recieved and sell to the highest bidder with firm offers and no conditions. The buyer has given up complete control and is just bidding way over asking to even be considered it's quite ridiculous in my opinion to give that much control to the sellers. I have viewed houses listed for 399,000 in brantford that sold for 550,000 in 2 days and they are not worth that. You pretty much have to tack on 20% to listing price to even be in the realm of having your offer accepted it's quite frustrating. Anyway rising rates spooked the market but shouldn't it mostly affect businesses that carry heavy debt?

tamaracktop wrote:    Overnight, all of the index futures tracked the movements of the 10-year yield. The rise in interest rates itself isn't surprising, it's the speed they have shot higher that's surprising. Rates are already up half a percent this year. The bond market is reacting to an expectation of an improving economy as GDP forecasts rise.
   The markets are discounting a return to a semblance of normalcy, and have been favoring stocks that will benefit from the reopening, such as travel and dining, etc. Energy is up 7% in the last week. As GDP forecasts rise, so do corporate earnings.   Certainly, rising rates aren't all bad. Granted, the 10-year yield is a benchmark for mortgages and auto loans, and obviously reduces the discounted value of future cash flows, but we have to keep in mind why these rates are rising.
   Surely no-one expected rates to stay below 1% forever.