I think the misconception is that people throw around the term “fed raising interest rates” in a haphazard manner. This is a typical knee jerk reaction however the 10 year yield has been slowly on the rise for the past several weeks.
Look at what Bill Gross said… pretty much the identical text that SK wrote above which I do agree with. The market movement was not only about the fed speech, it also had something to do with the slowdown in China.
All things being equal though, I would not have wanted to be a homebuyer floating a mortgage rate as you would have been slaughtered in the past 2 days. Bottom line is I don’t see the yield spiking…we are nowhere near that point and I don’t see the bond market bubble popping yet. It still has a few years left before it ruptures and when it does it will be ugly.
As for inflation, most of us have been suffering through higher prices for many commodities including food and water for the past several years. Don’t forget fuel and energy costs.
The only thing we have not had is wage inflation. I also believe the underemployment numbers and those that have simply dropped out of the workforce are fairly staggering. Similarly we have record numbers of citizens on welfare, food stamps, and disability.
