Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Moderator cut: edit
Fed-watching is about as lucrative a career as Supreme Court-watching.
There are risks to the recovery of tightening too soon. That’s an important reason why we have left rates as low as they are for as long as they have been.
-- Janet Yellen
Considering that the US bond market is double the size of the US stock market, your assertion is way off base. FOMC policy is arguably the single largest factor that influences financial markets.
What's important is going to be the attendant language that comes with the rate hike. Expect the Fed to say something to the effect of "any further increases will be considered only if the conditions on the ground can support them. We reserve the right to go back down to near-zero if economic conditions deteriorate."
Considering that the US bond market is double the size of the US stock market, your assertion is way off base. FOMC policy is arguably the single largest factor that influences financial markets.
What's important is going to be the attendant language that comes with the rate hike. Expect the Fed to say something to the effect of "any further increases will be considered only if the conditions on the ground can support them. We reserve the right to go back down to near-zero if economic conditions deteriorate."
Hmmm.... This one requires a Google.
The market cap of US stocks is a bit less than $25 trillion. About 130% of GDP which is quite high.
Learn something new every day. I didn't think it was more than 2:1. I don't have much money in the bond market because the yields are awful and there is so much interest rate risk so I don't track it.
What does that mean? The interest rates in question are by definition whatever the Fed decides they should be. What would it mean for them to "float"?
By float I meant change at will with the market (free market) and not be decided by a bunch of bankers. The Fed keeping rates low is similar to price controls on a certain item.
By float I meant change at will with the market (free market) and not be decided by a bunch of bankers. The Fed keeping rates low is similar to price controls on a certain item.
Similar in some way, but sovereign debt is not a product. It originates out of thin air by fiat, and that debt has to be assigned some original interest rate. Corporate debt for instance is more affected by markets since corps compete with other corps and other entities in order to borrow money.
Learn something new every day. I didn't think it was more than 2:1. I don't have much money in the bond market because the yields are awful and there is so much interest rate risk so I don't track it.
Depending on your age, this is a huge mistake. The vast majority of retail investors don't have nearly enough of their money in fixed income. I wouldn't necessarily be buying bonds now (like you said, the yields are low), but if you had a decent allocation of investment grade bonds right when the financial crisis hit, you would have been able to liquidate your bond holdings at a premium while buying stocks on a steep discount. Anybody who bought the US 30 years when they started issuing them again in the 90s was essentially sitting on a gold mine when September 2008 hit.
That's the extreme case, but it illustrates a point. Neglecting fixed income is a rookie mistake.
Rate increase is off the table. No way they will be increasing the reserve rate in this market. Is that a good thing? I am not so sure.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
