Rising rates: Reason to worry or sign of strength?

Julie C. Nichols General

Las Vegas Review-Journal – AP Writer Matthew Craft

The trends sound ominous. Mortgages get more expensive and both big companies and the federal government pay more to borrow. The stock market dips on suspicions that the Federal Reserve could start pulling its support for the economy this year.

The thing is, these current trends fall under the heading "good news."

How so? Because record-low interest rates are a legacy of the financial crisis. And as long as they disappear gradually, many in the financial world will be happy to see them go.

"It will mean we’re in a healthier economy," says J. J. Kinahan, chief strategist at TD Ameritrade.

Encouraging reports on housing and hiring, along with a soaring stock market, have led many to suspect that the Fed could cut back on its bond buying in the coming months. That’s the main reason traders have been selling bonds over recent weeks, driving down prices and lifting the 10-year Treasury yield to its highest level of the year on Wednesday – 2.23 percent.

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