Not exactly. I have a relative who's an executive for a major credit card company. She states rates are so high not because of Biden or the FED. It's because of something they call "margins". Credit card companies are intentionally charging "record high margins"... The interest above the prime lending rate. In other words, the average cardholder pays roughly 15% in annual interest on top of the prime rate. The prime rate is, in theory, the rate lenders charge their most creditworthy customers. Those margins have been high because of credit-card and other debt delinquency rate. Its highest level since 2011. The rate represents overdue card balances. Simply, we Americans have an escalating problem since 2011 with paying our credit card bills on time and very high numbers of credit card defaults. https://www.forbes.com/sites/billha...d-news-defaults-at-highest-level-in-14-years/ Yep, the Covid Pandemic did not help and it escalated America's consumer debt problems. Thus, we as Americans just are not able to pay off our balances and we falsely believe the FED will manage our interest rates at levels (low levels) so that we can pay our interest when in reality we then go out and get more credit so that we can get more debt instead of keeping our debt low. Further, if or when shit hits the fan (e.g. Pandemic, Inflation, Incompetent Congress, High Cost of Living)...we either blame the President of the United States or we look for a President to solve our credit problems when we're not educated enough to manage our own credit debt. Biden tried student loan forgiveness and Trump will now try to pressure the FED to lower interest rates in hopes that Credit Card companies will lower their "margin rates" for everybody instead of only for their most trustworthy customers who pay down their debt instead of increasing their debt load. Thus, even if the FED lowered rates to the single digits or down to ZERO...consumers are not smart enough to pay down their consumer debt and instead will use the opportunity to accumulate more debt. In the mean time, the few American channels I get in Canada...they have more credit card advertisements than all of the Canadian channels put together. Oddly, household debt to disposable income is much higher in Canada than the United States. Strangely, On a national accounts basis, the federal deficit in the U.S. in calendar 2023 (7.1% of U.S. GDP) was almost 11 times larger than the equivalent measure for Canada (0.66% of GDP). The average Canadian owes $3,929 on their credit cards. The average United States credit card debt is $8,599. America has a problem with its consumer debts and we're too stupid to use common sense to lower the debt so that Credit Card companies and other debt companies will lower those "margins" for all Americans...it should help our Federal deficit of the U.S. GDP. wrbtrader
Trump apparently wants "rates to zero immediately". That would spur a BLAST of economic and stock market orgasm.... but it would be inflationary. Trump would like that to make himself look good/better in the short run... but generating such inflation is NOT right for our people nor our country.
History shows that the Fed will eventually fold and cave to Trump after a few tweets. Why would anyone think that they would do anything different this time than fold to Trump again? They are lacking in 2 essential anatomical components: testicles, and spine. It's simply biology 101.
Suppose the real inflation is 5%, but under trump pressure the fed cuts interest rates to 1.5%. Will 10 year bond trade based on real interest or fed rate?
Probably based upon the fed rate + pumping of crypto and Quantum computing prices so that the inflation doesn't show up in more traditional goods and assets.