5% 10-Year T-Bond

Why are rates near 8%?  Mortgage rates have increased rapidly in October and are now just under 8%.  But the Federal Reserve hasn’t raised the Fed Funds rate since July, so what’s going on.  As I’ve noted many times before, while the Fed Funds rate influences mortgage rates, the two don’t move lock step.  The move from around 7% to almost 8% in just a few weeks has nothing to do with Fed action and everything to do with geopolitics.  There’s rarely one cause to this, and that is likely the case this time around.  Uncertainty in the mid-East, deficit spending in the US, and a number of economic indicators beginning to turn negative.  Now I’m not going to predict what is going to happen, but one this is clear from what has happened in October – the Fed may have lost control of what happens to interest rates at least the short term.

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