Have Interest Rates Hit Bottom? Multi Family Rates near lows USA Today
Very timely interesting article…… My comments below in bold.
It’s entirely possible that interest rates hit all-time lows earlier this month that will never again be seen in our lifetimes, as many are now proclaiming. If so, since bond prices move down when rates rise, bond values will never be as high as they were a few weeks ago. But it’s worth remembering that past major market turning points were not recognized as such at the time by the vast majority of investors. This is a general truth that applies to all investment arenas, by the way, not just the bond market. Consider the number of declarations over the last several years that interest rates had finally hit their all-time lows—and, therefore, bond prices had hit their all-time highs. Among the several hundred advisers and market timers I monitor, for example, an enormous amount of money has been lost by those confidently arguing that the markets were at just such a juncture. True to form, rates just kept going down—and down. When interest rates do finally hit their lows, chances are good that few will be confidently forecasting a trend reversal. So we should be taking with an appropriate grain of salt the number of current pronouncements of just such a reversal.
A walk down memory lane can be helpful in appreciating these aspects of market psychology. Take the mood in September 1981, which turned out to be the month in which interest rates hit their all-time high. That month, for example, the yield on the 10-Year Treasury Note hit 15.8%. Over the century prior, the ten-year yield had never gotten above 10%.
The 10-Year yield today stands at 1.57%, having dropped to 1.37% earlier this month.
Has the environment changed since 1981? Globally, Politically, USA Debt? Has Technological Advancements allowed for different central bank controls? Has global competition and currency manipulation changed the game? Its a wait and see moment….. I can’t wait to find out what happens next.