Hey wait…I thought the Fed was going to hold the Fed Funds Market Rate at basically zero!
Well well…lookie here! Mortgage rates have gone up 50 basis points since December, in spite of a very loose monetary policy by the Fed.
Treasury yields have climbed steadily in recent weeks because of weak demand. The government has had to offer a better interest rate to sell its bonds as investors shift toward stocks and riskier corporate debt.
Why should investors choose Treasurys, when they don’t provide a risk-adjusted return that justifies a rational investor picking them over high-risk corporate bonds?