Wednesday, May 24, 2006

Dipping Ten-Year
The ten-year Treasury has dropped to around 5% from close to 5.2% over the past two weeks. This stops a steady year-to-date rise in the ten-year (an increase of almost 1% at its peak). What does this mean? Inflation fears, which have supposedly spooked equity markets, would mean that the rate would go higher rather than lower. It may be the realization that the high gas prices are working their way through the economy in a not-so-positive way. The dip is good for real estate because cap rates have not moved up with interest rates, which have narrowed spreads and made real estate investing tougher. Hopefully this repreive will not be brief.

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