Why Interest Rates Are Not Likely To Rise Much In The Near Future

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.

Since early November 2018 when the 10-year Treasury note yield hit 3.24%, both the Treasury yield and 30 year mortgage rate (MBA) have plunged.

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fragilitybonds

Partly to blame is the slowing economies around the globe, particularly in Europe (check out Ford’s announcement of job cuts in Europe: Ford Motor Co. will shed thousands of jobs at its European operations as part of a bid to return the business to profitability with a broad restructuring that could include shuttering factories).

And then there is that 13% YoY decline in China Passenger Car Sales.

chinaautoyoy

So, despite global zero-interest policies (except for the US), global economies are slowing.

global econ slowing

It is difficult to push US interest rates higher when the global economy is slowing down.

To be sure, there are a whole host of wild cards that could send interest rates rising again: 1) US-China trade agreement, 2) ending the US government shutdown, 3) resolution of the neverending BREXIT issue, 4) France and Germany’s struggles to raise energy prices (Paris Accord?), etc.

The implied probability of a Fed rate hike in this global environment is pretty low.

fedpropb

And both the US Treasury actives curve and Dollar Swap curve remain kinked.

kinkyus

Will The Fed emulate Frank Booth from “Blue Velvet” and provide more oxygen to markets?

frankoxygen

 

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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