Anyone think that we'll see an interest rate hike in 2021?
- Thread starter kmiklas
- Start date
Nope. Fed already said it'll pin rates low to get average inflation up.
With that being said, real rates should tick up, and infact, breakevens have moved up. There is an expectation that it won't lead to a change in nominal yields on the short-end, though.
A popular trade on wall street right now is called a "steepener" where you sell duration.
With that being said, real rates should tick up, and infact, breakevens have moved up. There is an expectation that it won't lead to a change in nominal yields on the short-end, though.
A popular trade on wall street right now is called a "steepener" where you sell duration.
How would an interest rate hike make things less expensive?
I'm no Keynesian, but as I understand it, a higher interest rate makes dollars "more expensive." It discourages borrowing, and thus there is less money in circulation. This dampens inflation as the money supply decreases.
Just what we need...More borrowing at interest, which leads to more debt, which leads to less purchasing power. Inflation. What a wonderful idea. Thank you Woodrow Wilson.
That's just basic macro. Higher rates lead to a higher demand for dollar denominated assets, and shift risk preference from higher to lower.
Eurodollar curve says "No". Common sense says "Hell No".
COVID has done grave damage to World economies and there is no chance that the Fed, the ECB, or the BoJ raise rates in 2021. None. Zero.
Do you think that COVID will be in the rear mirror and the economy will be in hyperdrive?
If that's the case, the Dems will find another way to destroy the economy like a corporate tax hike and a hard stop on fracking.
COVID has done grave damage to World economies and there is no chance that the Fed, the ECB, or the BoJ raise rates in 2021. None. Zero.
Do you think that COVID will be in the rear mirror and the economy will be in hyperdrive?
If that's the case, the Dems will find another way to destroy the economy like a corporate tax hike and a hard stop on fracking.