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As long as the federal budget deficit remains high, interest rates cannot come down. A huge deficit acts as a proxy for inflation. Usually government finances a deficit through the creation of money. With the economy recovering, investors are concerned that vigorous growth will ensue, as political pressures to ease money are released. Defense is another area where spending cuts are not likely to occur. There are very few long-term investors in the financial markets. Therefore, swings in the interest rate sector will be sharp and pronounced.