Are you vulnerable to interest rate increases?

November 16, 2005

During President Bush's tour in Southeast Asia, he made a speech in Pusan, South Korea that said that China should emulate the democratic countries in Asia, including Taiwan, by giving its people more freedom, including the freedom to "read the Bible".

What it Means:

This kind of comment just shows how out of step Bush is with the rest of the Southeast Asian economies, who need China's economic growth to fuel their own. Bush's influence has waned over the past six months and this means the U.S. influence has waned, as well. Although interest rates remain low, the long term trend is rising inflation, a declining dollar, and higher interest rates. This type of rhetoric aimed at one of the dollar's biggest buyers could threaten the support for the strong dollar.

Action Steps:

Continue to evaluate your portfolio holdings of Southeast Asian mutual funds...and consider increasing them. Minimize your exposure to interest rate sensitive debts - particularly adjustable rate loans and interest only mortgages, which may continue to go up over the next year.