An odd thing was happening in the run-up to Tuesday’s election that few apart from compulsive market watchers were noticing but now looms large in the wake of former President Donald Trump’s election to a second term. Over the past 60 days or so, interest rates consumers pay for mortgages, auto loans and credit cards have risen substantially even as the Federal Reserve took a cleaver to the rates it controls back in September and, as widely expected, cut those rates by another quarter point Nov. 7.
As of that date the average rate on a 30-year, fixed rate mortgage was 6.79%, up from 6.08% as of Sept.
26, just after the Fed’s half-point interest rate cut, according to Freddie Mac’s national survey. What explains this disparity between the Fed’s actions and the rates actual consumers pay? The market. In that time frame, bond investors have relentlessly bid up yields on 10- and 30-year U.
S. Treasury bonds, which are closely correlated to mortgage and auto rates. Consumer rates in turn have followed.
We suspect these recent market moves indeed are noteworthy. We worry they say that federal fiscal policy is out of whack and — given the election results — likely to get even more so. In the fiscal year that ended Sept.
30, the federal government ran a deficit of $1.8 trillion. Fully 27% of federal spending was put on the national credit card.
And that was in a year in which there was no recession and the nation wasn’t at war. As we’ve written before, the nation’s.