Market Watch with Tom Waitt

March_21st_2012.mp3 Times a Changin    Interest Rates are starting to rise; Bonds which performed well in 2011 have lost principal value over the last 6 months. 10 Year T-Note (Click For Larger Picture) Ten year U.S. treasuries performed well in 2011 rising 15% in principal value despite falling coupon returns of less than 2%. Recent moves have taken coupon returns to 2.4% in the last 6 months eroding 5% of bond holders principal. Normal 10 year interest rates historically are 7%; if rates normalize capital erosion could be a staggering 33% decline. Bonds are risky at current levels. Seniors and savers would welcome a 7% return but would hurt current 10 year bond investors. Rates will rise, mortgage rates will rise and this may boost home sales as buyers attempt to lock in low rate loans. Many conservative investors could find their savings tied up in bond funds in the wrong place at the wrong time. The U.S. Federal reserve has pledged to keep rates low for the next 2 years; however in