predicting interest rate changes

Mysto · 05-05-2006, 05:39 AM

OK - I lied a little on the title. I don't think anyone can predict interest rate changes but - Do any of you think that you get warning before CD rates make a major move?

In other words, if rates go down - is there usually time to lock in cd rates or do they move too quickly on goverment/market changes. Trying to lock in some best rates. I'm only asking for opions based on the knowledge/experience/wisdom of the group. Thanks.

brewer12345 · 05-05-2006, 06:40 AM

The problem with this idea is that rate moves usually happen fairly gradually. Quarter point here, quarter point there... Before you know it rates have really fallen. Buy a ladder or buy something without too much duration and don't worry about it.

Maximillion · 05-05-2006, 08:22 AM

U.S, is technically at full employment, salary increases are accelerating,manafacturing is at 90% Capacity, Greenback has weakened severly against most major currencies, doesn't take much to figure out which way rates are going.

Bernake may delay, but the longer the Fed dithers, the quicker the hikes, I suspect this years elections may be a factor in the fed's actions.

Nords · 05-05-2006, 01:03 PM

Quote:

Originally Posted by Mysto

OK - I lied a little on the title.* I don't think anyone can predict interest rate changes but - Do any of you think that you get warning before CD rates make a major move?

No.

Quote:

Originally Posted by Mysto

In other words, if rates go down - is there usually time to lock in cd rates or do they move too quickly on goverment/market changes.

By the time you read the morning news, it's already too late.

Quote:

Originally Posted by Mysto

Trying to lock in some best rates. I'm only asking for opions based on the knowledge/experience/wisdom of the group. Thanks.

You can lock in the best rates every day, although the following day you may be long & wrong. A year ago 5% on a five-year CD seemed like a great deal, now I'm doing the penalty math to break it for a higher rate.

The best way to smooth the bumps is to keep refinancing the fixed-rate mortgage whenever it makes sense (for example when the payback is less than a year) and laddering the bonds/CDs.

wabmester · 05-05-2006, 01:18 PM

Well, the fed only has control over short-term rates. So, the question becomes "can you predict short-term rate changes?"

In theory, the yield curve is the best predictor of rate changes. You can think of long-term rates as sort of interest rate futures.

article

05-05-2006, 05:39 AM	#1
Mysto Recycles dryer sheets Join Date: Mar 2006 Posts: 171	predicting interest rate changes OK - I lied a little on the title. I don't think anyone can predict interest rate changes but - Do any of you think that you get warning before CD rates make a major move? In other words, if rates go down - is there usually time to lock in cd rates or do they move too quickly on goverment/market changes. Trying to lock in some best rates. I'm only asking for opions based on the knowledge/experience/wisdom of the group. Thanks. __________________ I'm trying to find myself.* Have you seen me anywhere today?

05-05-2006, 06:40 AM	#2
brewer12345 Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Mar 2003 Posts: 9,226	Re: predicting interest rate changes The problem with this idea is that rate moves usually happen fairly gradually. Quarter point here, quarter point there... Before you know it rates have really fallen. Buy a ladder or buy something without too much duration and don't worry about it. __________________ “When you realize that you are one of the rare few who observe moral principles in their relationships with others, there is a temptation to sink into amorality, not out of conviction or pleasure but simply to avoid further pain, because there is no greater suffering than being an angel in hell, whereas a devil feels at home wherever he goes.” – Martin Page, How I Became Stupid

05-05-2006, 08:22 AM	#3
Maximillion Full time employment: Posting here. Join Date: Feb 2006 Posts: 569	Re: predicting interest rate changes U.S, is technically at full employment, salary increases are accelerating,manafacturing is at 90% Capacity, Greenback has weakened severly against most major currencies, doesn't take much to figure out which way rates are going. Bernake may delay, but the longer the Fed dithers, the quicker the hikes, I suspect this years elections may be a factor in the fed's actions.

05-05-2006, 01:18 PM	#5
wabmester Thinks s/he gets paid by the post Join Date: Dec 2003 Posts: 4,461	Re: predicting interest rate changes Well, the fed only has control over short-term rates. So, the question becomes "can you predict short-term rate changes?" In theory, the yield curve is the best predictor of rate changes. You can think of long-term rates as sort of interest rate futures. article

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