3 comments

[OT] Interest Rates

Nov 14, 2016, 6:39 AM

As you guys might have noticed interest rates have been on a tear since the election and those (like me) who were short treasuries into made a killing. (I suspect my good buddy txtittyfag cleaned up with short treasuries as well.)

That said, I'm actually skeptical that interest rates can rise that much long term.. Sure infrastructure spending will help, but I'm skeptical that Trump will be able to tear independence away from the Fed. But beyond that, I think central bank policy was more a response to low inflation rather than the cause. I think the real cause is improvements in the speeds and cost of making most products and extracting raw materials. This is not something I see slowing down. So longer term, I still can't interest rates going that high.

So bottom line is don't get too carried away with those treasury shorts!

comments (3)

twentyfive9 years ago

I agree, I don't see interest rates going up quickly unless something like a massive default triggers a spike of some sort. I think as long as Trump doesn't do something really stupid like, he said try to renegotiate the debt or something drastic I see interest rates only rising incrementally for the foreseeable future.

RandomMember9 years ago

Well locking in your mortgage before this interest-rate rise sure makes you look like a genius. But only if you have strippers over to your new place.

Tax cuts for the wealthy and corporations will blow a fucking hole in the debt, but it would certainly put upward pressure on interests rates, no? Infrastructure spending, upward pressure, too. Tariffs and trade wars would put downward pressure. I'll take a wild guess that 10-yr treasury gets up to 3% within a yr or two.

Other wildcards: As @Smith will tell you, Yellen is no longer a supermodel worthy of sucking your dick. Following similar logic, Trump will replace her in 2018 with some incompetent TV star. Same goes for Stan Fischer (one of my heroes ) in 2018 because...well...he's smart and competent and doesn't fit in the Trump image. In fact Trump will appoint half-dozen people to reshape the Fed. Then maybe Rand Paul can push through a bill to audit the Fed or go back to the gold standard (cause of those Ayn Rand novels he read in high school).

Deregulation, together with cranks and fools at the Fed and White House, makes a perfect storm for another catastrophe..

Dougster9 years ago

@RandomMember: Not sure. I remember talking to the mortgage. guy I said I didn't think rates would go below where I locked in, but I couldn't see them going up much either. If rates do go up too much though it could hurt housing prices so not sure if you come out ahead short term. Not that I plan to sell for at least 10y though. :-)