Interest Rates 02 (Nov 14 - Dec 25)

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Yields on 10-year U.S. Treasurys fall nearly 30% in the past 12 months.

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THE CROWD WAS WRONG ABOUT INTEREST RATES

Today's chart is a reminder... trading interest rates can drive you to drink...

Read investment newsletters for more than a week, and you're bound to come across an interest rate prediction. Folks love to predict where interest rates are going. And they almost always predict that they'll go higher.

Real estate agents always predict higher rates and remind you to "lock in a low rate now." Speculators study government reports to guess where interest rates are going.

We track interest rates with the benchmark 10-year Treasury note. It's the most widely followed interest rate in the world. It's commonly cited when folks talk about the interest rate Uncle Sam pays when borrowing money.

Below is a 12-year chart of this rate. As you can see, back in 2004, this rate was around 4% (40 on the chart). Today, after years of declining, the rate is less than 2%. Years and years of losses and being wrong. Interest rates are driving the crowd to drink.

Source: www.dailywealth.com

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Bill Gross: Interest rates are going higher this year

Source: Bloomberg

http://thecrux.com/bill-gross-the-fed-w ... this-year/

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Where Interest Rates Are ACTUALLY Headed By Dr. Steve Sjuggerud

Who are you going to believe? The "King of Bonds" or your mortgage broker?

For years the experts have said interest rates HAVE to go higher. Your mortgage broker probably spent most of the last five years telling you that NOW is the time to refinance.

But interest rates keep heading lower… with mortgage rates following in their footsteps.

Instead of listening to your mortgage broker, let's listen to the "King of Bonds," Jeff Gundlach…

Jeff's the founder of DoubleLine Capital and earned his "King of Bonds" title by heading the TCW Total Return Bond Fund – one of the best-performing bond funds of the last decade.

Jeff's been adamant that interest rates will continue heading lower…

"The 10-year Treasury could join the Europeans and go to 1 percent. Why not? The European rates are at 1 percent. France is below 1 percent right now," he said recently.

That might seem crazy. But it's entirely possible. It matches the working script I've written about for years…

Governments around the world will keep interest rates lower than you can imagine for longer than you can imagine. And that will cause stock prices and real estate prices to go higher than you can imagine.

So far, my script has been so right that's it's actually approaching the point of ridiculousness…

For example, earlier this month, for the first time ever, the Japanese government wasn't paying any interest on five-year Japanese government bonds.

No, the Japanese government didn't default on its debts… That was simply the interest rate on a five-year bond in Japan. Yes, it was zero. No, I am not kidding.

It's not just Japan… You are welcome to lend your money to the German government for the next five years for no interest. Heck, if you live in Switzerland, you'd consider yourself lucky to earn 0% interest. Five-year bonds in Switzerland have a negative interest rate.

Even worse, the Swiss government's short-term interest rate is now set at negative 0.75% – meaning that YOU have to pay THEM interest to keep your money in the bank!

Here in America, we think earning 1.70% on a 10-year Treasury bond is terrible… But America is the "outlier." Take a look…

Most Americans think interest rates in America have to go up to go back to "normal." Your mortgage broker certainly thinks so…

The average investor expects U.S. 10-year bond yields to soar back to 3% by the end of 2015. But we are not in "normal" times…

We have serious "deflationary" forces out there… The crashing oil price is just one example. The world economy is simply not doing that well. Governments around the world are trying to fight those deflationary forces by printing money and keeping interest rates low.

The "King of Bonds" thinks this is going to continue. He expects interests to continue lower. And I agree with him.

Who are you going to believe?

Source: Daily Wealth

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Why Rising Rates Won't Kill This Bull Market By Dr. Steve Sjuggerud

Interest rates are expected to go up later this year – for the first time since 2006!

This is striking fear into the hearts of investors.

(Specifically, the Federal Reserve is widely expected to raise short-term interest rates – something it hasn't done since June of 2006.)

Most investors think that, when the Fed raises interest rates, asset prices (like stocks and real estate) have to fall.

It is true that the Fed will raise short-term interest rates at some point – possibly later this year.

However, this does not mean that stock prices have to fall…

You see, the Fed controls short-term interest rates. But it doesn't control long-term interest rates – those are set by the financial markets.

The conventional wisdom is that – if the Fed raises short-term interest rates, then long-term interest rates would follow them higher. You can see the logic… but it doesn't have to happen.

Just because the Fed raises short-term interest rates, it doesn't mean that long-term interest rates have to go up.

For example, the last time the Federal Reserve raised short-term interest rates, long-term interest rates stayed roughly the same, between 4% and 5%. Take a look:


The Fed dramatically raised short-term interest rates – from 1% to more than 5%. Meanwhile, long-term interest rates stayed roughly the same. (Mortgage rates stayed the same for those years as well, hovering around 6%.)

Could something similar happen again this time around? Absolutely.

And here's another important point…

During the last time the Fed was raising interest rates in a major way (2003 to 2007), stock prices actually went up! The S&P 500 went from a value of 1,100 to 1,500-plus.

Stocks didn't start to fall until the Fed CUT interest rates in late 2007.

So I have two important messages for you today…

The last time the Fed dramatically raised short-term interest rates, long-term interest rates (like mortgage rates) barely budged.

The last time the Fed dramatically raised short-term interest rates, stock prices actually went up.

Just this week, long-term interest rates in Germany fell to NEGATIVE interest rates. (That was on government bonds maturing in 2021.) Our reality today is that we live in a low-interest-rate world.

I can't guarantee it, of course. But I think there's a strong likelihood that long-term interest rates won't go up much at all when the Fed finally raises interest rates.

This is why stocks (and real estate) can still soar higher.

In today's low-interest-rate world, even if the Fed raises short-term interest rates, there will still be no alternative for savers and investors… They'll have to put their money into stocks.

So let the talking heads on TV worry about the effects of a rate hike by the Federal Reserve. But don't you worry about it. It won't end this bull market…

Source: Daily Wealth

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Surprising chart says interest rates are headed higher this year

by Tom McClellan

Source: Chart in Focus

http://thecrux.com/surprising-chart-say ... this-year/

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A surprising asset could predict the future of interest rates

by Tom McClellan

The upshot is that if crude-oil prices are really topping out now, then so should interest rates after the three-week lag period.

And if you want to know what mortgage rates are going to do in the future, watch what oil prices are doing now.

And if oil prices should resume their rise later this year, then we should expect a corresponding rise in long-term T-Bond interest rates.

Source: Chart in Focus

http://thecrux.com/this-surprising-asse ... est-rates/

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Why the Fed is unlikely to raise rates this year

by Jim Rickards

Source: Currency Wars Alert

http://thecrux.com/an-in-depth-look-at- ... o-persist/

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These charts show why the Fed may not raise rates in 2015

by Chris Kimble

Source: Kimble Charting Solutions

http://thecrux.com/these-charts-show-th ... ded-lower/

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Goldman: Here Are the Stocks to Own and Avoid When the Fed Is Hiking Rates

You might want to keep this list handy.

by Julie Verhage

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... 091415_BIZ