Interest rate future

J

jrcase

I recently found this forum and I am glad I did. I have been searching for an active forum that discusses interest rates/inflation/fixed income topics. Are there anymore websites/forums that are out there and are active discussing the same?

Also, I have read here that the bulk of the members seem to think inflation is just around the corner. I tend to agree. I live on interest income so this is a very important topic for me to learn all I can on. I am currently waiting on long term rates to rise to over 7% (my target) before I but into bonds again. I am currently in short term cash (money market). I need a minimum of 7% to make that long term commitment. A couple of questions:

1. Am I setting my target rate too low? Should I hold out for higher long term rates? What is everyones opinion?

2. What kind of time frame do you all think before long term rates go to ot above 7%?

3. What is your opinion on how high they will go? I remember the late 70's when a person could but a CD yielding 12% or higher. I would love to see that again!

Thanks to any who reply. I appreciate it.
 
If you want to play it like the late 70's this would be the sequence as I remember it...

1. gold goes nuts
2. currency crisis
3. interest rates spike
4. economy is killed
5. start lowering rates
6. now buy your long term bonds

That's my guess. Once they change directions and start lowering rates you can guess they will bring them back down to normal.

The question is since the Fed is definitely trying to avoid this, will it happen at all? I think it will.
 
I think u set ur target too high. The fed has a comfort zone for inflation on 1.5-2%. I highly doubt bonds will give a 5.25% real interest rate in this yield hungry world anytime soon. The babyboomers still have some years left to save. Gold tanked in 01, stocks 02-03, real estate now? I bought bonds in april/may last year and was very happy with 5.25%.

Maybe u will get ur bonds in 2016. That’s my guess.
 
Quote from thriftybob:

If you want to play it like the late 70's this would be the sequence as I remember it...

1. gold goes nuts
2. currency crisis
3. interest rates spike
4. economy is killed
5. start lowering rates
6. now buy your long term bonds

That's my guess. Once they change directions and start lowering rates you can guess they will bring them back down to normal.

The question is since the Fed is definitely trying to avoid this, will it happen at all? I think it will.
More...

currently it looks like that we will take this path :D

6. now buy your long term bonds
2. currency crisis
5. start lowering rates
1. gold goes nuts
4. economy is killed
3. interest rates spike
 
Quote from jrcase:

I recently found this forum and I am glad I did. I have been searching for an active forum that discusses interest rates/inflation/fixed income topics. Are there anymore websites/forums that are out there and are active discussing the same?

Also, I have read here that the bulk of the members seem to think inflation is just around the corner. I tend to agree. I live on interest income so this is a very important topic for me to learn all I can on. I am currently waiting on long term rates to rise to over 7% (my target) before I but into bonds again. I am currently in short term cash (money market). I need a minimum of 7% to make that long term commitment. A couple of questions:

1. Am I setting my target rate too low? Should I hold out for higher long term rates? What is everyones opinion?

2. What kind of time frame do you all think before long term rates go to ot above 7%?

3. What is your opinion on how high they will go? I remember the late 70's when a person could but a CD yielding 12% or higher. I would love to see that again!

Thanks to any who reply. I appreciate it.
More...

Some might laugh at my use of the word "perfecting", but I think that in the 70's and 80's they were still perfecting the tools needed to regulate the economy. Just like we figured out how to put people on the moon, I think we figured out a lot about how to regulate our economy. Rates spiked during that period because they finally figured out how to slam on the brakes. Never say never, but I don't think we'll see those kind of rates again...or at least I'm not banking on it.

SM
 
I think they have figured out how to not make harm with good intentions regulating the economy. To stabilize inflation is an achievable task for the fed, if it wants to.

When the economy is hit by a demand shock growth and employment will be more or less stabilized in the process when inflation is stabilized using the short term rate.

This is not the case when the economy is hit by a supply shock. If 25% of the workers suddenly becomes incapable of working or decides to retire it’s not possible to create growth even if the short term rate is cut to zero. This scenario would cause wage inflation, but if the fed raises short term rates to combat inflation it would destroy growth even more.. It’s a trade off, so what will the fed do?? If it fights inflation buy bonds, if not buy something else. Insiders would have such an advantage.

As a trader and investor I would feel a lot more safe going forward if the fed actualy had an explicit inflation target. Then it’s possible to navigate without risking to get screwed by the fed.
 
Thanks for all the replies. I appreciate it. Do any of you know of other forums/discussion groups that discuss these topics? I have done many internet searches and can't seem to find any.
 
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