7-2-24 Interest Rates Are A Function Of Inflation And Economic Growth

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Interest Rates have taken a big jump over the last few days, triggering an avalanche of emails, asking, 'what's going on?' Answer: Nothing. It's the end of the Quarter. There's lots of rebalancing going on, and interest rates have gotten very, very over-bought. Rates are stuck in a downward trend, which does not mean they're going to suddenly drop. Rates will track the slowing economic growth, however. Interest rates are a function of inflation, economic growth, and wages. Those are slowing down, but not dropping off a cliff, yet. And with a buy signal currently in place, rates could actually work a little higher for a bit. We're not expecting much a move in rates, more like drifting around in the neighborhood for a week or so. The move in Treasury-related ETF's however, was much larger than the move in interest rates: The first move, last week, was the end of Quarter rebalancing. The second move, yesterday, was the dividend effect of interest being paid into investment accounts.

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