Long-term interest rates are on the rise. The 10-year US Treasury bond yield, which had fallen below 1.5 percent this past summer and still stood at 1.75 percent just one month ago, is now approaching 2.5 percent. Since interest rates on bank deposits and loans tend to move together with those on government bonds, these higher yields will help many Americans, who will now earn more on their savings, at the same time they increase costs for others, who plan to borrow to purchase new homes and cars. On balance, however, rising long-term interest rates provide a welcome sign that the economic recovery remains intact and that the lasting effects of the financial crisis and Great Recession of 2007-09 continue to fade.
Read Full Article »