Instead of saying that the 30-year trend has been broken and we
are going up again, maybe this chart can be an alternative? I think
from a fundamental point of view, everybody would like to see
interest rates around 2-4%. That could be the new normal.
This is perhaps less a forecast than a hope...
Posted by DigiNomad on 25th of Mar 2024 at 01:57 pm
Remember that Interest rates are a function of economic growth
and future inflation expectations (higher growth = higher
rates...all else remaining equal). Hoping for lower rates is
kind of like hoping for reduced growth and low inflation - I'm all
in but it seems doubtful. But, if low rates come about naturally vs
via QE, it will not result in what I think you might be hoping
for...more bubble market mania. If it happens naturally, the
bubbles will pop. We've been conditioned by 2 decades of monetary
and now fiscal madness to want lower rates thinking they will boost
the markets into a frenzy. That's not how it works...unless the
rates are driven lower unnaturally by central banks buying their
own debt to hold interest rates low. Will the rates go lower
BECAUSE the Fed is likely to throw in the towel, ignore inflation
and go back to QE to avoid the pain of popping bubbles? Probably,
yes. Then you'll get a continuation of the bubble mania you
crave...but it's not because of rates that went lower naturally -
quite the opposite.
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10 year yield into a
Posted by lebow on 25th of Mar 2024 at 01:34 pm
10 year yield into a new normalisation?
Instead of saying that the 30-year trend has been broken and we are going up again, maybe this chart can be an alternative? I think from a fundamental point of view, everybody would like to see interest rates around 2-4%. That could be the new normal. This is perhaps less a forecast than a hope...
Remember that Interest rates are
Posted by DigiNomad on 25th of Mar 2024 at 01:57 pm
Remember that Interest rates are a function of economic growth and future inflation expectations (higher growth = higher rates...all else remaining equal). Hoping for lower rates is kind of like hoping for reduced growth and low inflation - I'm all in but it seems doubtful. But, if low rates come about naturally vs via QE, it will not result in what I think you might be hoping for...more bubble market mania. If it happens naturally, the bubbles will pop. We've been conditioned by 2 decades of monetary and now fiscal madness to want lower rates thinking they will boost the markets into a frenzy. That's not how it works...unless the rates are driven lower unnaturally by central banks buying their own debt to hold interest rates low. Will the rates go lower BECAUSE the Fed is likely to throw in the towel, ignore inflation and go back to QE to avoid the pain of popping bubbles? Probably, yes. Then you'll get a continuation of the bubble mania you crave...but it's not because of rates that went lower naturally - quite the opposite.