Wednesday, July 08, 2009

The ten-year Treasury bond is near 3.30%, down from nearly 4.00% in early June, and oil is close to $60 per barrel. Early last week oil was at almost $74 per barrel. I can't help but think that low interest rates and low oil prices are good for the overall economy. I know why, but don't understand the market's short term fixation that higher oil prices show economic strength. This is too smart by half. Higher oil prices hurt the economy and will stop any growth in short order, take it from someone that drives a big SUV. The economy is still not strong enough to withstand high gas prices. Lower interest rates mean lower mortgage rates that help the housing market, which is just starting to show signs of a rebound.

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