Posted 12/22/2023, 5:29:00 PM
Krugman: Bond Rally Signals Economic Positivity, But Interest Rates Could Stay Higher If Inflation Persists
- The recent rally in bond prices and decline in yields is positive news for the US economy, according to economist Paul Krugman
- Lower interest rates benefit rate-sensitive sectors like housing, as evidenced by the recent uptick in existing home sales
- The lower rates ease the burden of interest payments on the enormous US debt load, improving the federal fiscal outlook
- Investors may be getting ahead of themselves in pricing in significant rate cuts by the Fed next year
- Interest rates could stay higher for longer if inflationary pressures persist, according to BlackRock strategists