Feds just dropped key interest rates basis points, new rates 4.75%

breaking now.

www.cnn.com

I can't find the usual site I use. This one is inconvenient to use.

We should see what the rates are tomorrow.

decision. They're scared.

I'd bet they don't think will prevent a recession either, rather just mitigate the inevitable one.

watch the price of oil, gold, and food soar (thankfully they are not counted in the "core" inflation statistics).

On to the next bubble I guess!

I have a fixed rate mortgage, so I'm not worried about that one :)

?

It's meant to prop up Wall Street's share prices and bonds at the expense of out of control inflation.

You'll need it to buy a loaf of bread.

When interest rates go down, treasury bonds pay less. Countries that normally buy treasury bonds now have even less motivation to buy them. Our government needs to sell more of them to support all their various wars...

It seems someone else doesn't, or just doesn't care.

dividend on them is lower, the price is higher.

The interest rate or "coupon" rate on a Treasury remains constant for the life of the bond. What changes is the yield because the price of the bond itself has been bid either up or down. Bonds typically have a "par" value of $1000 (there are exceptions) and a specific maturity length. If you buy a 10 year Treasury that has a coupon rate of 4.75% you are going to get interest payments of $47.50 per year for ten years and at the end of ten years you get your $1000 back. If that bond you bought cost you a grand then it had a coupon of 4.75% and a YIELD of 4.75%. If the price of the bond had been bid higher than $1000 (which is currently the case with ten year Treasuries) you pay perhaps $1020 for the bond, receive your $47.50/year in interest but at maturity you get $1000 back. This makes the yield lower than the coupon.

Conversely, if the price of the bond is bid BELOW par, you might pay - say $980 for the bond. You still receive the same interest payment as above but at maturity you get $1000 back. This difference pushes the yield up. The actual interest rate has been constant. The yield changes as a mathematical function of the price you pay for the bond.

What the Fed changed today has nothing to do with the coupon rate paid on a Treasury Bond. It will affect yields because the price is surely now going to be bid up, but again, the coupon rate stays the same.


Here's a schedule of recent Treasury auctions with Maturities, Coupons and Yields;
http://www.treasurydirect.gov/RI/OFNtebnd

Are you all ready for $10/gallon gas? I'm not.:scared:

And it looks like our house is going to get a new roof this year afterall.