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Introduction to Financial Markets - Forecasting interest rates - Essay Example
Finance & Accounting
Pages 6 (1506 words)
Introduction to Financial Markets - Forecasting interest rates Name Institution Introduction to Financial Markets - Forecasting interest rates The "credit markets" section in a recent issue of The Financial Times Credit markets: Paper weight By Aline van Duyn, Michael Mackenzie and Richard Milne Topic: Some buyers fear a bond bubble may be building In this article, a Gary Lieb, a broker at Manhattan’s Apple Mortgage wonders why and how there are such cheap borrowing rates on mortgage loans…
Interest rates, according to the Financial Times , have fallen back to the historic lows, permitting companies, individuals, and some countries to borrow loans at a price lower than before. Contrary to this, households and the extensive economy still fight back in the wake of credit stagnation. The relationship between these two forces, that is the stimulating impact on economic operations of low borrowing prices and the damping impact of a liability squeeze has adverse repercussions for investors globally, from those individuals who save on their own to the world’s largest insurance companies (Aline, Mackenzie, & Milne, 2010). For the past couple of years, following the 2008 collapse in equity markets as well as in a hysterical serach for “secure” investments, more cash has been poured into bonds as compared to earlier times. Bonds from the U.S Treasury debt to upcoming market corporate bonds have been performing amazingly well, being ranked among the possessions around the world that have generated the largest returns in 2009 and 2010. ...
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