Interest Rates - Prediction?

Discussion in 'Economics' started by CN2000, May 25, 2006.

  1. CN2000


    Hi there!

    Is there any way to predict the future direction of interest rates?

  2. Look at gold
    Look at CRB index.
    Read the news and reverse consensus opinion.
  3. we're at historical lows... so lotsa room on way up... only 5 points down.

    there is no way to predict it... 10yr is at 5.074%, it signals that they dont believe fed will raise to 5.25%. but when fed does raise rate, it will adjust accordingly.
  4. A picture is worth a thousand words....

    Do you really think that long bond rates are going down?
  5. rosy


    i looked at you chart twice. I guess a picture generates a thousand predictions. You can argue anything with it.

    look at where eurodollars or FRAs are and use that as your prediction.
  6. Digs


    Sorry... short term rates may go up further but the boys in the BOND market will be buying 30yrs very soon , and we will be back to an inverted yield curve.

    So mortgage rates will flat to trending down, depending on your term length.

    Why buy bonds, safety assets, as investors sees that the USA housing market is not heading for a safe landing. Bad housing, means bad consumer spending, bad spending means bad GDP and corporate profits will slump, unemployment will jump.

    Ask your self, do you really think the FED can organise a soft landing in the housing market with world commodities hitting new highs. The FED must fight inflation. The must raise short term rates to soak up liquidity.

    Liquidty has come from refinancing and the FED pumping monies into the banking system, and now they must reverse.
  7. i think rates continue up forever

    US needs to draw in more than $3 billion every day just to break even from external deficits.

    central banks only bought a net $1.6 billion of US treasury stocks and bonds in March,.. Japan, the largest foreign holder of US government debt, sold a net $18.2 billion in Treasuries in February. China bought a net $1.6 billion in US debt in March

    So every dollar in new money is hot off the printing press=inflation. Gotta raise dollars and fight inflation - only way to do it is jack rates. Sounds like US wants a softer dollar but still... Currency has to have some backers....Real estate be damned. I can't see any other way out

    Euro looks like its poised to break out. Canadian dollar is smoking. Yen is hot and only thing holding it back is jawboning. Gold looked ramped to make its next upleg. The sky is falling ahhhhhhhhhhh!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
  8. I've checked some of your other posts, and you're apparently not an idiot, so I'll simply point out that the chart has a little red star marked "target" on it, and that it the underlying security is the RYJUX, which is a retail inverse long bond vehicle.

    Don't know how I can make it clearer that technically I expect higher long bond rates.

    Fundamentally, the long bond yield really needs to rise to avoid all sorts of nasty underfunding problems. Hence the 'conundrum' greenspan used to refer to.

    Problem is that you and I are not speaking the same time frame. That chart is WEEKLY. You are an options Market Maker. We have two very different worldviews and time frame perspectives. I'm not looking for the quick scalp.

    Not saying that we don't correct significantly in yields (we already have somewhat), but in a year's time, do you really expect 30 year yields under 5.20?
  9. drsteph,

    I'll second your view on the 30 year long bond rate.

    While my time horizon is short term, I keep an eye open for the long term trend (6 months to a year out) as well.

    Between the war, the deficit, the dollar, housing etc, I believe rising rates are the only sure thing over the next 6 months to a year.

    I wish I had made a long term prediction in my Bond Trader 2006 journal, as I was biased to the short side back in February, but the journal was mostly done to document my short term trades for a few weeks or so.

    To the original poster:

    You may want to check out this excellent thread from elitetrader:

    Bond Rally nearing an end?
    #10     May 26, 2006