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12-31-2014, 08:39 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Oct 2011
Location: Philadelphia
Posts: 1,409
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2015 Interest Rates
I live in persistent fear and expectation of interest rates moving in a big way. This is an interesting contrarian view. Brief and thoughtful.
Why Interest Rates May Stay Low in 2015 - Business Insider
Happy New Year!
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12-31-2014, 08:54 PM
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#2
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Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
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How long have you lived with this fear?
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12-31-2014, 09:01 PM
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#3
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There is a difference between the Fed raising the Fed Funds Rate, which impacts short-term investments, and long-term interest rates like the 10-year treasury which are influenced by other issues.
I think it likely that the Fed raises the Funds Rate a token amount in 2015. I also think it won't cause the 10-year treasury interest rate to increase. It might even cause it to drop if people conclude the token rate rise puts the economy in jeopardy.
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12-31-2014, 09:23 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Oct 2011
Location: Philadelphia
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 Quote:
Originally Posted by audreyh1
How long have you lived with this fear?
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Since I did the math and realized the implied damage to my portfolio if rates/yields returned to historic norms and everything price adjusted!
Yikes!
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Luck is when Preparation meets Opportunity.
FIRE'd 1/1/24
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12-31-2014, 09:25 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Oct 2011
Location: Philadelphia
Posts: 1,409
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Quote:
Originally Posted by audreyh1
There is a difference between the Fed raising the Fed Funds Rate, which impacts short-term investments, and long-term interest rates like the 10-year treasury which are influenced by other issues.
I think it likely that the Fed raises the Funds Rate a token amount in 2015. I also think it won't cause the 10-year treasury interest rate to increase. It might even cause it to drop if people conclude the token rate rise puts the economy in jeopardy.
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Agree the funds rate might move without everything following...on the other hand, if the herd gets spooked and moves things could get weird quickly.
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Luck is when Preparation meets Opportunity.
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12-31-2014, 09:53 PM
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#6
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Give me a museum and I'll fill it. (Picasso)
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Quote:
Originally Posted by krotoole
Agree the funds rate might move without everything following...on the other hand, if the herd gets spooked and moves things could get weird quickly.
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Things like that don't last long. See 2013 as a reference.
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12-31-2014, 09:57 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
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Quote:
Originally Posted by krotoole
Since I did the math and realized the implied damage to my portfolio if rates/yields returned to historic norms and everything price adjusted!
Yikes!
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Don't worry about "historic norms".
Inflation is not at "historic norms", nor is GDP or global growth.
Things don't happen overnight. Any process will still take years.
Try this for perspective: Jeffrey Gundlach Webcast, December 9 - Business Insider
You can still lose more in equities.
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01-01-2015, 12:41 PM
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#8
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Fear is what a little old lady has every month when her social security money runs out and she has to withdraw money from her savings account paying net no interest. And those funds often run out.
My mother in law chose not to refill some medicine, had a heart arythmia problem and died.
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01-01-2015, 01:54 PM
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#9
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Fed funds rate might bump some, but with the US Dollar being so strong, it would make our exports even more costly. Prices on imported goods here in the USA may even go down.
I do not see rates moving too much, if at all. Our dollar needs to be weaker, not stronger.
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01-01-2015, 03:37 PM
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#10
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Quote:
Originally Posted by Senator
Fed funds rate might bump some, but with the US Dollar being so strong, it would make our exports even more costly. Prices on imported goods here in the USA may even go down.
I do not see rates moving too much, if at all. Our dollar needs to be weaker, not stronger.
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Though I have no opinion, a guy on another forum I follow a bit had an interesting opinion. He said the more people and experts have talked about the rates having to rise, the more he has been piling into long term issues. He said if has worked to perfection the past 4 years. I enjoy reading strong opinions, and like everything I guess, it works until it doesn't.
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01-01-2015, 09:48 PM
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#11
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When a lot of people are convinced of a certain outcome, it usually already is fully priced into the market.
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01-02-2015, 08:51 AM
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#12
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2015 Interest Rates
I think there are both economic and political pressures to get rates "normalized", but I still think they're (The Fed) more worried about deflation than inflation.
I predict maybe a hike or two of 25 basis points.
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