Poll: When will the Fed start lowering interest rate

[COcheesehead]

I am not taking chances. I am locking in yields and have been for the last while. Everything I bought is up, some fairly substantially. I have even pulled forward some low coupon bonds maturing or being called in the first part of next year just to take advantage of some, in my opinion, corporate bond deals.
Whether this recent dip in rates is the last or the beginning of the last, I have seen the evidence in the bond market that is a feeding frenzy for anything with coupon, quality, duration and yield. I am not waiting for the music to stop to grab my chair.
You can reasonably say at some point in the next 8-18 months rates are going to retreat and if you are holding good bonds, you will benefit. Maybe a once in a generation occurrence.

 

[njhowie]

Mods may want to move this to the funny jokes thread or create a "Ain't Going to Happen" thread.

It is certainly not out of the question. Simply a matter of how deep a recession we get and if there is a need to kick start the economy. We could see rates below 2% and even 1% again. Keep in mind - the Fed raises rates with baby steps on the way up. When the SHTF, it's leaps and bounds on the way down.

At this time, housing has pretty much grinded to a halt because buyers don't want a 30-year 7% or 8% mortgage at high prices. By the same token, inventory is low because homeowners do not want to sell and give up their sub-4% mortgages.

As far as this poll - I think the Fed is going to try and stay on the sidelines the entire year, specifically because it is an election year, and we've all heard rates will be kept higher for longer. So, absent the full-on recession, I think the Fed will not do anything during 2024.

 

[Montecfo]

It is certainly not out of the question. Simply a matter of how deep a recession we get and if there is a need to kick start the economy. We could see rates below 2% and even 1% again. Keep in mind - the Fed raises rates with baby steps on the way up. When the SHTF, it's leaps and bounds on the way down.

At this time, housing has pretty much grinded to a halt because buyers don't want a 30-year 7% or 8% mortgage at high prices. By the same token, inventory is low because homeowners do not want to sell and give up their sub-4% mortgages.

As far as this poll - I think the Fed is going to try and stay on the sidelines the entire year, specifically because it is an election year, and we've all heard rates will be kept higher for longer. So, absent the full-on recession, I think the Fed will not do anything during 2024.

Mostly agree except it is very very clear the Fed has no idea what it will do this year.

The reason why is in your first paragraph.

During the pandemic the Fed said they planned to keep rates "lower for longer" by saying rates would stay near 0% through 2023.

Obviously they were spectacularly wrong.

Their forward looking statements are a type of jawboning to influence public opinion but as you can see it can border on hyperbole.

 

[dknighd]

I'm trying not to laugh. You can not predict these things.

 

[frayne]

Sometime before the November election.

Agree, the decision when will be driven as much by political headwinds as by good, sound economic reasons. Which BTW would be the case regardless of which political party is in power at the time. Even though we all know (ha, ha) the Fed is independent.

 

[Winemaker]

I am buying good quality bank preferreds right now that are beaten down because of interest rate raises and the added effect it had on their underlying bond portfolios. Whenever interest rates begin to lower, that should be a sweet spot, and I won't have to worry about duration time.

 

[Chuckanut]

I’m hoping for inflation in the area of 2%, but I think getting that last 100 basis points from 3% to 2% may be tough. It’s the 80/20 rule. The first 80% is easy, the last 20% is the tough part. That seems to be very common in life. We’ll see.

 

[audreyh1]

I'm trying not to laugh. You can not predict these things.

These polls are just for entertainment, like the S&P500 end of year predictions.

 

[Montecfo]

The two year Treasury is said to be a predictor of Fed target. Closed at 4.88% today which suggests a robust cut.

 

[flatrock]

When will the A rated MYGA’s start doing major cuts on new money on the 5 year contracts?

 

[freedom2022]

These polls are just for entertainment, like the S&P500 end of year predictions.

I agree.
When the Fed start lowering interest rate, any interest on another poll: eerily similar to 70's - 80's: Yes or No. ?

 

[Raygun99]

Election Year... That's all you need to know.. Q3

 

[Drake3287]

What's interesting is the amount of people, mostly younger, that believe rates will go back to the historical 2% to 3% range again. Most of us older members here realize that those super low rates were a once in a life time thing.

In going forward, a 5% to 6% rate will be considered low.

 

[ERhoosier]

History shows deciding when to 'lock-in' rates for the longer term by following Fed Funds is a crap shoot. Many times a Fed rate cut is soon followed by another rise to higher than when they were cut.

https://fred.stlouisfed.org/series/fedfunds

 

[Badger]

With a CD maturing in a month I will be buying the longest CD that has at least a 5% rate or maybe a ladder. After that another matures in a year that I would like to use for another CD if the rates are still good. So I am hoping for the end of 4th quarter in 2024. Nothing to base this on just hoping since the crystal ball broke when the cat pushed it off the table.

Cheers!

 

[Montecfo]

The CME Fedwatch tool says first rate cut in May. Quarter point.

 

[mickeyd]

I think that one more 25bps bump up is in store, then, after no action for months, they will drop 25bps in Dec 2024.*

*Note: this is purely a guess as my crystal ball is out for annual maintenance this week.

 

[SecondCor521]

I don't know when - I voted 3Q I think.

I do think that they'll wait too long and will drop it rapidly when they realize they're behind the curve.

I don't know how much the election will affect the timing of things. I suspect rather little personally.

 

[audreyh1]

It really depends on whether a recession shows up. The Fed will be more aggressive about lowering rates if it looks like we are entering a recession.

 

[ownyourfuture]

I'm with those who've stated they hope we don't go back to the ultra low rates of the recent past. My fidelity MM was @ 0.01% in November 2021 & 5.00% today.
49900.00% higher.

As for when the Fed might start lowering rates, I chose 2025.

 

[mcbraemer]

I am not taking chances. I am locking in yields and have been for the last while. Everything I bought is up, some fairly substantially. I have even pulled forward some low coupon bonds maturing or being called in the first part of next year just to take advantage of some, in my opinion, corporate bond deals.
Whether this recent dip in rates is the last or the beginning of the last, I have seen the evidence in the bond market that is a feeding frenzy for anything with coupon, quality, duration and yield. I am not waiting for the music to stop to grab my chair.
You can reasonably say at some point in the next 8-18 months rates are going to retreat and if you are holding good bonds, you will benefit. Maybe a once in a generation occurrence.

+1
I concur completely and following a similar strategy.

 

[rk911]

+1
I concur completely and following a similar strategy.

+2

 

[ShokWaveRider]

According to what this guy is saying, the market is expecting cuts in 2024. That does not make it gospel though.

 

[Closet_Gamer]

I'm in the higher-for-longer camp as I believe there are structural things that will make inflation very hard to shake on a sustained basis. The move away from China and (I believe) a US workforce that really is changing its relationship with productive work, and other societal factors are going to make it hard to keep inflation down over the long term.

Where interest rates sit relative to inflation is another question. Monetizing the debt via rates that are below inflation may become a reality.

Of course, there are black swan events that could cause rates to again reset to near-zero. The turbulence in Chinese real estate and their shadow banking world could trigger a crisis that would reverberate globally

Net: I voted 2025.

 

[ncbill]

After their rate hikes cause the next recession.