ents compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically ruThe bubble is coming! The bubble is coming! Yeah, right … and so are the aliens, at least those belonging to the Empire of the Rising Sun.

In the general order of things, when short-term interest rates of U.S. Treasury bonds exceed long-term rates, market sentiment suggests that the long-term outlook is poor, and that the yields offered by long-term fixed income will continue to fall. This generates an inverted-yield curve, typically an indicator of a pending economic recession. So far, however, there has been no inversion of any consequences in the yield terms of U.S. Treasury bonds as measured from the 91 days through the 30 years redemption periods. In addition, long-term rates are behaving very, very well partially because of the tremendous demand for long-term treasuries that has been coming from places like Japan.

Clearly, most real estate investors care about the future of interest rates, and so do most lenders. In the United States, the Treasury yield curve is the first mover of all domestic interest rates and an influential factor in setting global rates. As governments compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically run

suggests that the long-term outlook is poor, and that the yields offered by long-term fixed income will continue to fall. This generates an inverted-yield curve, typically an indicator of a pending economic recession. So far, however, there has been no inversion of any consequences in the yield terms of U.S. Treasury bonds as measured from the 91 days through the 30 years redemption periods. In addition, long-term rates are behaving very, very well partially because of the tremendous demand for long-term treasuries that has been coming from places like Japan.

Clearly, most real estate investors care about the future of interest rates, and so do most lenders. In the United States, the Treasury yield curve is the first mover of all domestic interest rates and an influential factor in setting global rates. As governments compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically ru

nsequences in the yield terms of U.S. Treasury bonds as measured from the 91 days through the 30 years redemption periods. In addition, long-term rates are behaving very, very well partially because of the tremendous demand for long-term treasuries that has been coming from places like Japan.

Clearly, most real estate investors care about the future of interest rates, and so do most lenders. In the United States, the Treasury yield curve is the first mover of all domestic interest rates and an influential factor in setting global rates. As governments compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically ru

s like Japan.

Clearly, most real estate investors care about the future of interest rates, and so do most lenders. In the United States, the Treasury yield curve is the first mover of all domestic interest rates and an influential factor in setting global rates. As governments compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically ru

ents compete with corporations and lending institutions to attract investors in the open financial markets, any bond or debt security that contains greater risk than that of a similar Treasury bond must offer a higher yield. For example, the 30-year mortgage rate historically runs 1% to 2% above the yield on 30-year Treasury bonds. While this is true to a certain extent, it has not influenced the spread between short and long-term rates in the beginning months of 2006. As long-term rates on treasuries are stationary, the recent hikes of interest rates seem to have affected only the short-term bond rates.

The Treasury yield curve reflects the cost of U.S. Government’s debt and is, therefore, ultimately a supply-demand phenomenon, central to the Fed’s monetary policy. If the Fed wants to increase rates, it supplies more short-term securities in open market operations. The increase in the supply of short-term securities restricts the money in circulation since borrowers give money to the Fed. In turn, this decrease in the money supply increases the short-term interest rate because there is less money in circulation (credit) available for borrowers. Which is exactly what has happened in the first few months of 2006.

But two additional very important events have also occurred, concomitantly. First, Japanese investors have and are snapping up U.S. treasury long-term bo