Salient to Investors:

Caroline Baum writes:

  • For the past two months, the Fed has been doing everything in its power to depress long-term interest rates.  The Fed seems to talk as if they can send rates tumbling again. They can’t. The problem is the underlying message, not communication. The US economy is gradually improving so QE will become superfluous.
  • The market’s response to talk of tapering as a taste of things to come. Long-term interest rates have retraced only a quarter of their losses since May. The buy-and-hold investors who were content to hide in Treasuries earlier this year have been selling them to bond dealers.
  • Communication has its limits: it cannot forestall a cyclical rise in interest rates or even guarantee that the increase is orderly.
  • Higher interest rates should be viewed as a badge of success as something would be amiss if a stronger economy did not usher in higher rates.


Read the full article at

Click here to receive free and immediate email alerts of the latest forecasts.