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I wonder how many will get out of the market when/if it hits around 4%? Would you? I wont but I also have fixed income products in our portfolio to make sure we have enough to live on.
Why would someone ask about bond yields in the retirement forum? This is a valid question as rising rates make bonds a more competitive investment in comparison to stocks, especially at the sky high valuations we have right now in the markets.
A lot of people have been lulled into a false sense of security when it comes to the stock market. I think it's very possible we could have a flat 10 years in the market from current levels. Stock market is being propped up by buyback mania right now, something I've often criticized companies for doing.
If we have another economic downturn I believe the central banks will try more quantitative easing and drive down rates to even lower levels yet. Envision a negative fed funds rate and mortgage rates at 2%. The major problem with fractional reserve compound interest central banking is the interest is kind of a poison to the system.. make the interest rates zero or negative and in theory you can sustain fractional reserve banking forever. Of course there becomes a limit as to how much of each other's debt we can launder without major inflation to dilute it's value. We're going to rapidly approach a social program funding problem in the coming 20 years not just in the US, but globally as birth rates go down and lifespans go up.
long yields can't go up simply because the economy will be decimated... imagine mortgage rates at 6%, that will be total carnage for Real Estate that has inflated asset prices in some areas due to crazy low rates. If Real Estate falls the entire economy goes down with it.
there is a limit to what the economy can take as well as usually the first flight to safety knocks treasury yields down , especially the long term ones .
long yields can't go up simply because the economy will be decimated... imagine mortgage rates at 6%, that will be total carnage for Real Estate that has inflated asset prices in some areas due to crazy low rates. If Real Estate falls the entire economy goes down with it.
Oh no 6% mortgage rates? How would anyone survive? I can’t imaging 8-12%
It's possible we could have an inverted yield curve with the way short term rates are rising. That would not bode well for the economy. I'll be keeping my eye on it and getting more defensive possibly since stocks are already in my opinion pretty richly valued. In order for me to get defensive it would have to go completely inverted by at least .25% , not just get close.... so say a 2 year note yielding 3.75% while the 30 year is only yielding 3.25 to 3.5%, something like that.
it's a very interesting picture of how the other parts of the curve have responded to every Fed rate hike from 1970. 1976-1980 is particularly interesting where the FFR increased by +15.25% and the 10YT increased by just +5.63% and that is over a 4 year period.
Oh no 6% mortgage rates? How would anyone survive? I can’t imaging 8-12%
real estate was booming here in 1987 when i bought my first investment property . i was thrilled to get a mortgage at only 8-1/4%
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