Believe it or not it is the right time to refinance your mortgage into one year adjustable linked to a one year Tbill – here is why?
Fred Day
Jun. 20, 2007

The 30 and 10 year Treasuries took a heavy beating the last several weeks. Fort the ten-year note, the yield jumped from 4.5 to 5.25% - a 17% inverted crash in a few weeks. The longer end took even worse beating.

The 10, 15, and 30-year mortgage rates are going straight up for the last several months. The long-term Treasury yield suggests it will go up much further in the next few weeks.

Let us analyze why the fixed mortgage rates are rising. The debt market is worried about commodity and wage inflation, but at the same time all the data that is coming out from Commerce Department suggest a slowdown or sluggishness. Then what is really happening?

It is called stagflation. There is some inflation but the economy is slowing down while inflation is accelerating. Political pressures will force Fed to cut rates. People in Main Street are having difficulty paying mortgage, rents, food bills, and gas bills. The gasoline is above $3 per gallon – and that is killing people’s budget. As politicians force Fed to cut rates, inflation will actually accelerate. Inflation is caused by excessive money supply in the system. There is no lack of liquidity in the system. People just do not know what to do with their money except losing them in business or markets and so on. That is the reason why the Private Equity funds are buying anything and everything thinking that will give them the above 10% return.

The short-term rates will plummet down to zero percent just like in Japan by 2012. The long-term rates will skyrocket to 12% because of budget deficit, trade deficit and weaker dollar. Right now no one is thinking about the future like this. No matter what you credit rating is they are willing to provide you an adjustable rate mortgage. Mostly people are taking fixed rate mortgages.

Later unless you credit score (FICO) is above 750, they will not give you an adjustable rate mortgage. Before any one can understand much, convert your fixed rate mortgage to a few simple one year adjustable rate mortgage linked to US 1 year Tbill.

Buy the short end and sell the long end of the Treasury – play the stagflation equation
Alex Roja
It is time to bet on the effects of the stagflation. The economy is stagnating. The commodity and wage inflations are firming.
READ MORE>>

Like dot com bubble caused the the tech sector collpase, the Private Equity and hedge Fund bubble will plummet the banking and financial services sector
Mike Moran
The bubble in hedge funds and private equity funds is much bigger than that of the dot com and the real estate. The Private Equity funds are buying anything they can find in the Street.
READ MORE>>

Believe it or not it is the right time to refinance your mortgage into one year adjustable linked to a one year Tbill – here is why?
Fred Day
Before any one can understand much, convert your fixed rate mortgage to a few simple one year adjustable rate mortgage linked to US 1 year Tbill.
READ MORE>>

One more new high and stock market is ready for a collapse – higher interest rate, stagflation, oil, food, and lack of corporate pricing power
Sam Adelton
The stock market is real vulnerable. The bond market is making a counter trend move to diffuse the oversold condition. Soon it will test the high in yields. The yields in the ten-year note can soon rise to 6%.
READ MORE>>

MORE ARTICLES >>