Loan Relief Now

The Dow Jones has been experiencing a great deal of volatility over the last month. We’ve seen 100 point swings or greater as nearly an everyday occurance. What gives? Well, bond traders may provide part of the answer. The New York Times reports, “stock investors often take their cues from the fixed-income market anyway, because bond investors have a better reputation for accurately forecasting the economy.” Bond traders started the year by predicting the economy would tank as a result of all the defaults in the housing mortgage market. The conventional wisdom was that the U.S. economic boom came about thanks to the recent boom in the housing market. When the new home sales took a downturn, common sense dictated that the overall economy would follow suit. However, other areas of the GDP including retail sales have made up for these shortcomings, and the U.S. economy has done much better than most analysts expected. Now that an interest rate cut does not appear to be on the horizon (if we’re reading the Fed’s tea leaves correctly), buying bonds at this point is probably not the best course of action. Stay tuned for further developments.