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November 16, 2018 | Is the ‘Fed’ Driving Interest Rates Down? The 10 year is now 3.07%!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

Today, November 16, 2018, shows that the 10 year treasury is down to 3.07%. This is down from 3.24% on November 8. That’s rather substantial. How is the Fed accomplishing this event and why? It appears that the balance sheet of the Fed did not go down this past week. Could it be that our Fed is pumping cash into treasuries to force rates down? Or is there another explanation which I am missing?

 

The Fed claims that our economy is strong and growing. Chairman Powell has stated this in his recent speeches. See today’s WSJ. But is he also bowing to Mr. Trump’s desire for lower interest rates? I am speculating, but I think the Fed is causing this drop in rates (especially this past week and today). Billions of cash flow accrues within the Fed balance sheet from their prior investments of nearly $4 trillion. Could some of these funds be used to lower interest rates (say to help our U.S. markets)?

 

Is it realistic to assume that our Fed is temporarily trying to lower rates via direct actions by their Plunge Protection Team (PPT)? A drop in the 10 year rate to 3.07% seems odd when the words from the Fed are that rates must continue up to reach a new ‘normal’ level? Jobless claims did increase this past week and emerging markets are experiencing a slowdown. But Chairman Powell has stated that our economy is strong. Has he changed his thinking?

 

If the rates were up to 3.24% on November 8 and now are going down to a level near 3.0% this reveals that a change in Fed thinking may be happening. We could witness a new normal of around 3% going forward. But I am speculating on all this as I have no hard evidence on this rate decrease. I am curious, however, why the rates are now going down (rather substantially). Am I missing the core reason? Think for yourself on all these issues.

 

I am: https://kingdomecon.wordpress.com. Next week’s rates may reveal what is happening. If rates continue down (or stay in the low 3% area) this would be significant for real estate and autos. Note: I am still seeking help with funds to advance my goals for this blog. See donate button for some help. Thanks in advance!

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November 16th, 2018

Posted In: Kingdom Economics

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