MarketTrak Question/Comment Message


Posted By: Chris J   Date: Sat Aug 25, 2007

Title: 90 Day T-Bills

Message:
  In the last Forecast for V8.2 (08/23/07 20:37 MDT) it was stated in the comments that the 90 day T-Bill interest rate has increased since Monday and this will have a negative impact on the broader market.
  Does this statement still hold true?
  Would not the increasing rate indicate that investors are moving out of T-Bills and back into the Stock-Market, thus having a positive impact on the Stock Market?
  Regards,
  Chris J

Response:
  The movement of funds from bonds to stocks is treated in the model; however, the value of interest rates is deemed to be more important by the networks. The most important input term is the MSI which decreases as interest rates increase. In general, interest rate increases are bad for stocks.

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