I follow the advice of very few “experts,” and Richard Russell is one (www.dowtheoryletters.com). He says mortgage interest rates have to rise soon. That means more notes will be created as sellers realize they have to create paper to sell their properties.
Today he wrote:
“So far, the US has been borrowing to finance our good life and our debts. We borrow from other nations, we borrow from Social Security, we borrow from whom ever will lend us money. To make our obsessive borrowing more attractive, we will have to raise rates. And that’s when the trouble begins.
“The bond vigilantes are sophisticated and absolutely ruthless. They see the big picture, and the immediate big picture — is rising rates. As a result, the vigilantes have been selling their Treasuries, and to Ben Bernanke’s consternation (let’s call it his horror), as the vigilantes dump their Treasuries, rates are rising. As rates rise, mortgage rates rise, and the specter of a second “thud” in housing comes into view. So, is this a good time to sell your house? Probably it is. Remember the old admonition, “Your first loss is your best loss.””
