Bond Outlook [by bridport & cie, September 26th 2007]
No, the Fed rate cut has not addressed the underlying problems, even if it was a necessary step to prevent immediate economic collapse. The sub-prime crisis is far from over, our own interaction with market-makers shows that liquidity has not improved significantly, and consumer confidence on both sides of the Atlantic is on the slide. Moreover, the lower Fed rate is hastening the decline of the USD and beckoning inflation in the USA . |
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Due to resets there will be major increases in interest payments in November for adjustable rate mortgages (ARMs). |
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