It is important from now on to look closely at the 10 year US treasury yield chart, the long term interest rate chart. Yield has been rising since May and has reached a 2 year high. Wallstreet knows that long term interest rate is on a definite rise. So is mortgage rate. Mortgages have gone from 3.5 percent to about 4.5 percent in the past month.
It is a known fact that long term interest rate is rising. Mortgage from now on will rise. If news of the tapering comes out, the yield will rise somemore. This is the reason why the bond price has been dropping.
Although Ben Bernanke told us that short term interest rate, the FED Funds rate is still kept at 0-0.25%, sooner or later it will start to rise.
With interest rate rise, more and mroe people might not want to speculate anymore. There is the worry that people will put their money inside the banks should interest rate starts to rise as economy gets better.
"This will be the chart to look at that is going to change the investment habits of investors" says Mr Hu Li Yang, Asian Leading Investment Guru.
In Singapore, we have also seen the government trying to prevent us from borrowing too much in a rising interest rate environment.
Be prepared for a rising interest rate FROM NOW ON!
One high probability way to make money when interest rate rise or when QE3 stops...
Shorting the bond ETF (symbol: TLT) or shorting the high yield funds like (MFS High Yield Municiple Trust symbol: CMU) listed in US.
Creating a traders community