“The economy will continue to improve as spending picks up given the steady improvement in the labor market,” Carl Riccadonna, senior U.S. economist at Deutsche Bank AG in New York, said in a telephone interview March 20. “The end result of that is an increase in interest rates.”
Riccadonna forecasts 10-year Treasury yields will rise to 2.75 percent by year-end, above analysts’ median estimate of 2.25 percent, according to a Bloomberg News survey.
Consumers pulled back after the October 2008 collapse of Lehman Brothers Holdings Inc. froze financial markets. Home mortgage debt fell to $9.4 trillion at the end of 2012 from a record $10.6 trillion in 2008, reflecting foreclosures, lower property prices and tighter credit, according to Fed data.
Instead households, which include individuals, domestic hedge funds, private equity funds, and personal trusts, funneled $1.04 trillion into Treasuries last year, compared with $648 billion in 2011, according to Fed flow of funds data.
Deposits at U.S. financial institutions exceeded loans by $2.03 trillion as of March 6. In the month before Lehman’s bankruptcy loans exceeded deposits by $205 billion.
“We’ve seen many forms of this grand increase in deposits, even as interest rates are low and people are not earning much,” David Ader, the head of U.S. government bond strategy at CRT Capital Group LLC in Stamford, Connecticut, said in a telephone interview March 21. “If there isn’t much loan demand, it’s going to stay this way for a while.”
Ader forecast 10-year Treasury yields will rise to 2.5 percent by year-end.
While the Fed has injected more than $2.5 trillion into the economy since 2008 to revive growth, GDP is forecast to grow 1.9 percent this year, below the 2.5 percent average the past two decades, according to the median estimate in a Bloomberg News survey of 93 economists.
Boehner Declaring No Debt Crisis Revealed in Lending Data
No comments:
Post a Comment