Long Term Interest Rates

NEW YORK -- U.S. stocks closed mixed yesterday as a rally i semiconductor stocks offset a rise in long-term interest rates to a six-month high.Stocks also got a boost as better-than-expected earnings from AlliedSignal Inc. pushed up the stock of companies, such as Caterpillar Inc.,that perform best as the economy strengthens, and as Britain lowered a key interest rate.Patrick Moriarty, chief investment officer at Bank Julius Baer, said he is "very bullish" about U.S. stocks until April. The Federal Reserve's move Friday to raise interest rates "is out of the way. It's highly unlikely they'll do so again in the next two months."

NEW YORK -- The third-poorest city in Pennsylvania is a lot poorer because of a 28-year bet on interest rates that already has gone awry. The Reading, Pa., school district, which has 18,323 students, must pay $230,000 this week to Deutsche Bank AG, Germany's largest bank, because it's on the losing side of a wager that long-term interest rates would rise faster than short-term interest rates. In April, the district board rushed approval of the so-called interest-rate swap in eight days after its financial adviser said the transaction might earn the district $16 million by 2034.

Long-term interest rates plunged yesterday to levels not seen in two years, extending an autumn decline and prompting hope of cheap-money sustenance for a weak economy.The yield on the government's main 30-year bond, the icon and bellwether of the U.S. debt market, fell to 6.02 percent from 6.08 percent late Friday. Twice yesterday the yield dipped below 6.0 percent, heading toward the 25-year record low of 5.8 percent set in 1993.Lower rates helped send the Dow Jones industrial average up 52.39 points to another record high of 5,139.

WASHINGTON - When the Federal Reserve Board's policy-makers meet today and tomorrow, they likely will raise short-term interest rates for the ninth time since last June. Economic theory would tell you this should be rippling out through the economy by now, sending up long-term interest rates, including those on home mortgages. But over the past year, long-term interest rates have fallen. The 10-year Treasury rate is down to 3.9 percent, compared with 5.33 percent a year ago. The average fixed-rate 30-year home mortgage has slipped to 5.57 percent, down from 6.25 percent a year ago. This disconnect between short- and long-term rates, which Federal Reserve Chairman Alan Greenspan has called a "conundrum," has left even the best economists chewing their pencils.

Go long -- on bonds that is.The way the experts see it, investors are going to have a tough time doing wrong by long-term interest rates in the coming months.President Clinton's budget, which raises taxes on the wealthy, could stall an economic recovery or trim the federal deficit, which would remove any upward pressure on interest rates, or do both.So, nine bond experts polled by the Orange County Register, in Santa Ana, Calif., urge fixed-income investors to add to their bond holdings over the next three months.

RAC Mortgage Investment Corp.'s shares are up more than 70 percent this year as the Columbia-based company has benefited from the large spread between short- and long-term interest rates, Charles A. Mills, an analyst with Anderson & Strudwick Inc., said yesterday.The real estate investment trust, which buys and secures residential mortgage loans and invests in mortgage-related securities, earns the difference between its short-term borrowing costs and the mortgage interest rates it receives on loans.

NEW YORK -- U.S. long-term interest rates would fall if President Bill Clinton and Republican leaders in Congress reach a compromise plan to balance the budget, Federal Reserve Chairman Alan Greenspan suggested last night."

WASHINGTON -- The United States could hear some criticism today from other major industrialized nations for the recent rise in interest rates.Though the Clinton administration can point to success in boosting domestic growth, finance ministers and central bankers from the Group of Seven industrialized nations, gathering here today for one of their regular meetings to discuss the world economy, may express concern about the U.S. interest rate explosion.The...

NEW YORK -- U.S. stocks closed mixed yesterday, as concern about profits for oil, drug, and computer companies vied with optimism about falling long-term interest rates."

WASHINGTON -- The Clinton administration claimed full credit for the nation's improving economic prospects yesterday, but independent economists disputed the impact of President Clinton's policies on deficit reduction, growth, and interest rates.Treasury Secretary Lloyd Bentsen, National Economic Council Director Robert Rubin and White House Council of Economic Advisers Chairwoman Laura Tyson held a year-end briefing for reporters at the White House to predict that the economy would continue to grow in 1994 and that interest rates and inflation would remain low.Mr.

The Federal Reserve's job only gets tougher from here. Which explains a lot about the recent turmoil in global financial markets. The Fed has been raising its benchmark short-term interest rate since June, when the rate was at a generational low of 1 percent. Everyone knew that was an emergency level for an economy no longer facing an emergency. So a series of six quarter-point rate increases didn't surprise anyone. March 22 brought No. 7, which put the Fed's rate at 2.75 percent. That was no shocker either.

IF YOU FOLLOW financial market news too closely, you will run into yourself. In late January 2004, I wrote this: "Beginning last fall, most analysts bet interest rates would rise in 2004, eroding the value of bonds and other fixed-income investments. That forecast will come true someday. But January has witnessed a surprise rally in bonds. The yield on the benchmark 10-year note fell below 4 percent last week for the first time since October." Those observations would be true again today, word-for-word, just by changing 2004 to 2005 and "last week" to "last month."

Home prices in Maryland jumped 8.65 percent during the 12 months that ended Sept. 30, giving the state the fourth-highest appreciation rate in the country, according to federal statistics released yesterday. Maryland's housing-cost growth rate was more than 3 points higher than the 5.61 percent national average, the Office of Federal Housing Enterprise Oversight said. Only Rhode Island at 12.35 percent, California at 9.7 percent and the District of Columbia at 9.1 percent recorded bigger gains.

THE DROP in long-term interest rates -- as evidenced by record low yields on the benchmark 30-year bond -- is having an impact for consumers: Mortgage rates are falling, for instance. But not everyone is benefiting. Home loans are cheaper, but those on fixed incomes are now getting lower returns on their investments. Who are the winners and losers when rates fall?Harold EvenskyPrincipal, Evensky, Katz & Levett, a Miami financial consulting firmIn fixed income, the losers are going to be the people who have fixed-income investments who have not diversified their holdings such as someone who invests in one-year CDs and rolls them over each year.

Long-term interest rates plunged yesterday to levels not seen in two years, extending an autumn decline and prompting hope of cheap-money sustenance for a weak economy.The yield on the government's main 30-year bond, the icon and bellwether of the U.S. debt market, fell to 6.02 percent from 6.08 percent late Friday. Twice yesterday the yield dipped below 6.0 percent, heading toward the 25-year record low of 5.8 percent set in 1993.Lower rates helped send the Dow Jones industrial average up 52.39 points to another record high of 5,139.

AS THE DOW JONES average floats merrily above the 5000 mark and interest rates keep dipping ever so nicely, balanced-budget negotiators on Capitol Hill would be wise to heed Federal Reserve chairman Alan Greenspan's admonition.If they fail to come to an agreement and allow tax and spending issues to remain unresolved through the 1996 election campaign, Mr. Greenspan warns, "there will be a sharp increase in long-term interest rates." And, of course, a sharp drop in stock prices.His words are of far greater significance than the current posturing in budget talks.

By cutting short-term interest rates to their lowest levels in 39 years, the Federal Reserve should have been able to jump-start the nation's stalled economy. That medicine has worked well in the previous eight post-World War II recoveries. But these are not normal times and the normal remedies are not working.The nation is experiencing a feeble recovery. Job creation has fallen off. Orders have not picked up and industrial production declined last month. There is fear of another dip again later this year.

NEW YORK -- U.S. long-term interest rates would fall if President Bill Clinton and Republican leaders in Congress reach a compromise plan to balance the budget, Federal Reserve Chairman Alan Greenspan suggested last night."

Austin, Tex. -- DESPITE STEADY growth and low inflation, polls show that voters, especially the middle class, are unhappy and may not reward the Democrats.Have they forgotten economic growth?No, but higher interest rates have spoiled the benefits of growth for many Americans.Contrary to the prevailing consensus, the growth record in this period of expansion is poor. Total real growth in the first three years after recessions in 1970, 1974 and 1982 averaged nearly 16 percent.But from 1991-94, total growth will barely reach 10 percent.