After an early close on Friday, rates ended slightly higher than where they began the week. The week ahead will be abbreviated as the market remains closed on Monday in observance of President’s Day. But even though it will be a short week, the economic calendar is still fairly active. So what’s in store for rates?
Last week, rates edged lower before reversing course and heading higher as the Obama stimulus plan worked its way through congress. It will be interesting to see if the President’s stimulus package actually stimulates anything as proponents of the plan claim the plan is nothing more than the largest pork spending bill ever.
One thing is for sure, the stimulus package in its current form is the largest sum of money ever spent in the history of the world in an attempt to stimulate the economy – So will it actually work? Only time will tell, but if history is correct like it so often is, it will likely not accomplish its goal. Considering to date, a government has never been able to spend its way out of a recession. The last time it was attempted was a few years ago when Japan passed a massive spending bill to correct their recessionary heading. But like all other past spending bills including Roosevelt’s “New Deal,” the only thing Japan gained was moving their economy deeper into a recession and a massive debt for their children and grandchildren to payback.
The abbreviated week ahead boasts several high impact reports that can influence rates, but it will likely be political news that will continue to leave the market volatile as investors try and figure out where the market is heading.