February 2018

TREND ALERT®: Rising interest rates rattle markets. Home sales slumping. What’s next?

 

TREND ALERT®:
Rising interest rates rattle markets. Home sales slumping. What’s next?

KINGSTON, NY, 28 February 2018—In early February, equity markets went into a tailspin over fears that the US Central Bank would raise interest rates to contain inflation.

All it took Tuesday to drop the Dow 299 were comments from Federal Reserve Chairman, Jerome Powell, suggesting interest rates may be more aggressively raised to keep the economy from overheating, than Wall Street anticipated. 

But it's more than equities slumping when interest rates rise. In the US, when mortgage rates rose to 4.40 percent, new home sales fell 7.8 percent in December and pending home sales dropped 4.7 percent in January, hitting the lowest point in four years.

GOT NO MONEY

The US business media blames home sales declines on supply issues. However, the facts prove otherwise. Currently, it takes 6.1 months to clear the housing supply. Considering the normal standard of six to seven months to clear inventory, this is not why housing is slumping.

Equity Market Forecast: Correction, Crash or new Highs?

1518619377_bc99.jpg

Everyone tuned-in to stock market news knows the story. US equities experienced a 10-percent correction recently over concerns that higher inflation would push the Federal Reserve to tighten monetary policy faster than expected.

The Street feared that stopping the cheap money flow that juiced equity markets since 2009, would put a damper on future stock market investment.