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Interest rates in the next few years
Old 12-22-2016, 07:42 AM   #1
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Interest rates in the next few years

Since interest rates are so important to not only investors but to so many others I was wondering if anyone had an opinion on where interest rates are going. I realize no one has a crystal ball . Still, we all have opinions and if anyone would like to guess on where interest rates might be going and why ,I think it would make for an interesting thread since the topic is important to most of us on the forum. That is why I am asking, since I simply don't know enough to even make an educated guess.
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Old 12-22-2016, 07:46 AM   #2
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... I simply don't know enough to even make an educated guess.
For the past several years financial experts (those who claim to know enough to predict future rates) have been wrong - way wrong. Why do you think this group will fare any better?
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Old 12-22-2016, 07:49 AM   #3
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I just want to see if I can learn something. If I can't, I have lost nothing.
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Old 12-22-2016, 08:07 AM   #4
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A family member is an executive in the mortgage business. He thinks the days of mortgages under 5% are nearly over-most are up to 4.5 (30 yr. fixed) currently.

One mans' learned opinion..........
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Old 12-22-2016, 08:08 AM   #5
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BTW, he advises watching the 10 year Treasuries-says they are the most accurate to determine direction of mortgages.
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Old 12-22-2016, 08:11 AM   #6
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I just want to see if I can learn something. If I can't, I have lost nothing.
How will you know if what you learn is correct or not?
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Old 12-22-2016, 08:13 AM   #7
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BTW, he advises watching the 10 year Treasuries-says they are the most accurate to determine direction of mortgages.
I wonder if the 10 year reacts before the actual rate increase or in anticipation of a rate increase?
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Old 12-22-2016, 08:14 AM   #8
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Overall the bond market is pretty efficient. What you see is what you get. It's all priced in. Did you notice that all the price movement in the last month was prior to the Fed announcement?
Forecasts - forget it.
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Old 12-22-2016, 08:17 AM   #9
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How will you know if what you learn is correct or not?
By observing what actually happens in the future.
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Old 12-22-2016, 08:25 AM   #10
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Overall the bond market is pretty efficient. What you see is what you get. It's all priced in. Did you notice that all the price movement in the last month was prior to the Fed announcement?
Forecasts - forget it.
Before the December meeting it seemed bonds were going down, they were trying to get out in front of a rate increase. I didn't really make the connection then, but I do now. I am trying to learn so better decisions can be made.
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Old 12-22-2016, 08:29 AM   #11
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Very difficult to predict the unknowable.
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Old 12-22-2016, 08:51 AM   #12
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Sine rates cannot go too much lower, I suspect that they will go up. I think the more important thing to prepare for is stagflation, not interest rates going up.
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Old 12-22-2016, 09:17 AM   #13
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Very difficult to predict the unknowable.
+1 There is totally no way to know.
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Old 12-22-2016, 06:25 PM   #14
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To raise rates will make US$ stronger and trade deficit higher what in turn will affect negatively our economy, add to our budget deficit (interest on Debt) and increase the Debt. I am not a trained economist but looking at the US Debt clock numbers point out on above statement. Many would ask then why the Feds did raise in Dec 2016 and promise 3 more raises in 2017. May be economy is much stronger, deficit turned south and we do not need to borrow anymore and I am not aware of it (I hope). Yet it could be that the Feds raised the rate in order to attract more foreign capital into US instead of some of them fleeing the US Debt market.
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Old 12-22-2016, 06:28 PM   #15
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Besides I was looking for a higher 5 years CD rates after the increase but it looks like Banks stay with same rates. May be Banks need more time for them to react?
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Old 12-22-2016, 07:25 PM   #16
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I've accumulated some predictions (edited for bond's only):

In 2015, Jack Bogle said: 3% nominal over the next decade.
In 2016, Vanguard Research said: 10-year U.S. Treasury yield of 2.5%
In 2016, Michael Kitces said: Using Shiller PE, real returns of 1% for bonds through the 2020's.

Now ya know!
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Old 12-22-2016, 08:16 PM   #17
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I think whatever happens will be dramatically different than the experts predict. Ten year treasuries will either end up at 4.50% or above at the end of 2017 if the economy heats up due to promised budgetary stimulus or these plans flop and the Fed will have to retreat at they'll head back towards 1.0%.

I expect 2017 will be volatile across all types of financial instruments and investments.
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Old 12-22-2016, 08:46 PM   #18
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Since global interest rates have reached 5000-year lows it's easier to see them rising than dropping more.
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Old 12-22-2016, 09:04 PM   #19
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I think the more important thing to prepare for is stagflation, not interest rates going up.
Stagflation is always the most dangerous outcome. Every ER plan should contemplate the possibility of extended high inflation/stagflation.
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Old 12-22-2016, 09:05 PM   #20
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I expect to rebalance to my set AA. Tax loss harvest. Invest monthly. Repeat as necessary.
I also read long ago that folks who say they know the future are either lying to you, themselves or in reality, both.
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