House Beautiful

After rising quickly over the last couple of months on the back of talk that the Federal Reserve would soon taper its quantitative easing (QE) program, the 10-year Treasury yield seems to be encountering some significant resistance at the 3% level. I think interest rates are at or near their highs for the year. I don't believe job and economic growth are strong enough to be able to support yields much higher than this. The recent rise in rates has already curtailed mortgage refinancing activity substantially and will have other negative economic impacts if they rise further.

In addition, when the Federal Reserve does take action, it will likely be through several small steps of reducing mortgage and government debt purchases. Armed with this outlook, I continue to allocate more funds into some of the high yield sectors of the market that have underperformed recently as interest rates have risen....370 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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