Possible reasons for rate increases:

· A recovering equities market that will take cash from bonds and plant it in stocks.

· Real corporate earnings growth based on revenue increases as opposed to cost cutting.

· Increased government deficit spending that will cause the government to issue more debt such as financing the war effort or reduced tax revenues. (Wouldn’t it be nice to have an open-ended credit card you can pay whenever you want and also get online payday loan with instant approval?)


·Improved economic data

·Shifting to junk bonds as the economy improves

·Better yields on the euro dollar based on weakness in US dollar and yields

·Corporate debt issuance taking money away from Treasuries (short term effect)

·Peace in the Middle East (don't hold your breath)

·Any signs of inflation

·Increase in the risk spread added to the treasury yield to determine loan rates

·The Bin Laden family turns on the Bush family, develops a conscience, forms Terrorists anonymous and dedicates their lives to peaceful causes thereby nearly ending all terrorist activities in the world.

· Arnie turns the CA economy upside down and into a deep recession, but can’t be terminated from office for two years, unless he’s totally recalled by the same voters that elected him.

· Michael Moore is elected president, socializes the health, drug and oil industries, becomes a “jaba the hut” type dictator and is expelled with Aristide to a remote island after ruining the country’s economic system.


Possible reasons for rate decreases:

· Any economic, political or natural crisis anywhere in the world

· Continuing bad economic data, primarily a lack of consumer confidence and thus spending

· A declining equities market. Online payday loan application included.

· A narrowing in the premium spread between Treasury bonds and the mortgage rate (I still have no idea how this works mechanically, but it's generally based on risk, inflation and other market factors)

· More CEO bad boys and girls caught violating SEC rules.

· Bush resigns after recognizing he doesn't have the brain cells to run this country and that he has been nothing more than a puppet for the good old boys and Saudi royalty and wants to get in touch with his own identity. He goes on tour to rave reviews for MAD magazine as an Alfred E. Newman double. (Probably no impact on rates, but not a bad option in my opinion)

·In a live version of Predator III, Arnie meets the predator in the form of the CA legislature, CTA, unions, environmentalists, bureaucrats, etc. and terminates them. A new amendment to the constitution is passed by the States, allowing foreign born immigrants that were successful body builders and “B” rated actors to run for president and he handily wins the 2008 presidential election while filming the next Terminator sequel.

· Deflation