Failure to address these issues in the post- election environment would raise the risk that investors here and abroad would lose confidence in the willingness and ability of the United States to get a better grip on its fiscal affairs and cause a severe backup of intermediate and long term interest rates.
economy in the latter half of 1993 would face risks of sharply rising long term interest rates and a sharply declining dollar, stifling economic growth and worsening an otherwise favorable inflation outlook.
McGee said that the federal government's need to finance its deficit would absorb money in the credit markets and put continued upward pressure on
long term interest rates.
However, the study also cautions that when real, long term interest rates are already low, further changes in rates can have a disproportionately large impact on the housing market.
At the same time, house prices in high-priced cities are more sensitive to real, long term interest rates because interest expense is a higher fraction of annual ownership costs.
Levis stated that contrary to these institutions the elimination of 30 year treasury bond and any related unexpected reduction in
long term interest rates should not have a material adverse impact on the Company's operations.
