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Interest rates in the next few years
12-22-2016, 06:42 AM
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#1
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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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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Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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12-22-2016, 06:46 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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 Quote:
Originally Posted by UnrealizedPotential
... I simply don't know enough to even make an educated guess.
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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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Numbers is hard
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12-22-2016, 06:49 AM
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#3
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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I just want to see if I can learn something. If I can't, I have lost nothing.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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12-22-2016, 07:07 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: Midwest
Posts: 1,795
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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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12-22-2016, 07:08 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Dec 2010
Location: Midwest
Posts: 1,795
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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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12-22-2016, 07:11 AM
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#6
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,724
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Quote:
Originally Posted by UnrealizedPotential
I just want to see if I can learn something. If I can't, I have lost nothing.
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How will you know if what you learn is correct or not?
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12-22-2016, 07:13 AM
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#7
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Quote:
Originally Posted by brucethebroker
BTW, he advises watching the 10 year Treasuries-says they are the most accurate to determine direction of mortgages.
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I wonder if the 10 year reacts before the actual rate increase or in anticipation of a rate increase?
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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12-22-2016, 07:14 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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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.
__________________
Took SS at 62 and hope I live long enough to regret the decision.
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12-22-2016, 07:17 AM
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#9
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Quote:
Originally Posted by MichaelB
How will you know if what you learn is correct or not?
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By observing what actually happens in the future.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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12-22-2016, 07:25 AM
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#10
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,390
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Quote:
Originally Posted by foxfirev5
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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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.
__________________
Understanding both the power of compound interest and the difficulty of getting it is the heart and soul of understanding a lot of things. Charlie Munger
The first rule of compounding: Never interupt it unnecessarily. Charlie Munger
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12-22-2016, 07:29 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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Very difficult to predict the unknowable.
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12-22-2016, 07:51 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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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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FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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12-22-2016, 08:17 AM
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#13
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Dec 2015
Location: Michigan
Posts: 5,003
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Quote:
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Very difficult to predict the unknowable.
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+1 There is totally no way to know.
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"The mountains are calling, and I must go." John Muir
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12-22-2016, 05:25 PM
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#14
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Full time employment: Posting here.
Join Date: Aug 2015
Posts: 550
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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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12-22-2016, 05:28 PM
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#15
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Full time employment: Posting here.
Join Date: Aug 2015
Posts: 550
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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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12-22-2016, 06:25 PM
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#16
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Full time employment: Posting here.
Join Date: May 2007
Posts: 883
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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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"It is better to have a permanent income than to be fascinating". Oscar Wilde
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12-22-2016, 07:16 PM
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#17
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Recycles dryer sheets
Join Date: Feb 2015
Location: Jacksonville
Posts: 61
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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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12-22-2016, 07:46 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,905
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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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12-22-2016, 08:04 PM
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#19
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Senator
I think the more important thing to prepare for is stagflation, not interest rates going up.
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Stagflation is always the most dangerous outcome. Every ER plan should contemplate the possibility of extended high inflation/stagflation.
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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12-22-2016, 08:05 PM
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#20
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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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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